Wednesday, January 9, 2013

Resolution One: Family Budget

Why we needed a budget: 
At the end of each month, we were routinely running out of money, sometimes with bills left to pay. This made it so that some bills were doubled the next month and our money very quickly began slipping through our fingers

Deciding what we value:
Food. Once I put together an initial budget, it became clear that we spent a whole lot more than most people we knew on groceries. Since we buy high quality food, we accept and expect the higher cost. We try to buy food we can feel ethically sound in buying (pasture-raised meat, eggs, and dairy; local and organic vegetables and fruit, organic grains and sugar, etc). We also spread our money around many different grocery stores and farmer's markets. We have one store that has the best deal on bulk items like flour and rice, another store where we buy harder-to-find "ethnic" ingredients like fresh locally-made tofu and noodles, and we buy the bulk of our vegetables and fruit in season at the local farmer's markets. Though we knew we wanted to pay more for higher quality, we also knew we were spending too much and too impulsively. So we made up a system for ourselves where we buy bulk items and household necessities (like toilet paper) once a month, then have a set weekly budget for the farmer's markets (where we buy our meat, vegetables, and fruit). Having a set amount before entering the store or market (as well as eating beforehand) has made our spending decrease by $200 per month.

Eating Out. It became clear that since Birch and I cook almost exclusively from scratch for each meal of the day, we really appreciate a meal out of the house at least once a week. Nothing too extravagant, just a pop-in to the local taqueria or a snack at the bakery. Looking at our unstructured budget, we could see that we were eating out too regularly and most of all when we were stressed. Putting a cap on what we could spend eating out meant that we had something to look forward to each week. We have come to look at it as a little present to ourselves instead of an escape.

It also meant we had to figure out how to make mealtime at home a better experience for everybody. Birch is an amazing cook, but the nature of cooking from scratch is that it takes longer! After spending all day with the kids, I'm usually in dire need of a break when Birch gets home. So, we're working on meal-planning and stream-lining chores so Birch doesn't end up washing dishes he needs instead of preparing the family meal.

Doing this has saved us about $100 per month.

A Beautiful, Organized Home. Birch and I are both horrible at keeping the house clean. I mean, really bad. After years of frustration, we are putting our full effort into creating a home that is easy for us to navigate. This means buying a few things like bookcases, shelves, and hooks so that when we come home we don't just explode on the living room floor. So, our need to organize has been put in the budget. Some months we'll buy something, others we'll put the cash away in a jar to buy a bigger item later.

This is an added expense, but we feel quite strongly that we need it in order to reduce the stress in our lives.

Giving. As part of our budget, we want to share what we have with others. To this end, we donate a small amount to a few different organizations, both local and global. This year, inspired by this family's story, we are adding a spare change jar to our entry. Every day we will empty our pockets of all spare change and put it in the jar. Those quarters may be difficult to part with, so I think I'll go the route of not even looking at the change and just throwing it in. At the end of the year, we'll count it out and roll it up. We like Heifer International and have been donating there for a couple of years. Now we'll add this annual splurge to buy a family somewhere a sheep, some ducks, a beehive, whatever seems appropriate that year. If there is any change left over, that goes back in the jar for the next year. Do you have any favorite charities?

This is also an added expense, but we feel strongly about it. Birch and I both grew up in generous families who we are very grateful to for teaching us the value of giving to others and to those less fortunate. I hope that with each progressing year, we'll be able to give away a larger portion of our income (especially as we pay off loans, etc).

How I've gone about creating a budget:
I'm an Excel novice, so I just use one of their pre-made budget spreadsheets. I entered in our actual expenses, etc., but having their formulas for calculating differences, etc., has been really useful and a big timesaver.

  1. Create a spreadsheet with obvious categories (rent, utilities, groceries, insurance, fuel, loan payments, pet food, donations)
  2. I use a spreadsheet that uses a number of formulas working for me that automatically calculate the difference in costs, difference in income vs. projected cost, and the ultimate difference between income vs. actual cost
  3. Go through online accounts and/or receipts and write down what I spend on what in the appropriate category 
  4. Put all miscellaneous spending in a separate category with an explanation of its purpose in the notes
  5. Group miscellaneous spending into categories that make sense to me (kids' clothing, medicine, dining out/entertainment, garden upkeep)
  6. Create a new spreadsheet with a projected cost of each expense as well as an actual cost
  7. Each month check the actual cost against the projected cost (if there is a large enough difference between projected and actual cost, I readjust the projected cost)
  8. Since some payments aren't actually monthly, I have a set amount I put away each month into a jar labeled with its purpose (propane bill, home and garden maintenance, vet emergencies) This system is also displayed on the spreadsheet
  9. I take the difference between income vs. actual cost at the end of each month and divide it into jars labeled for birthdays, holidays, and money to spend on clothing for Birch and I
  10. At the end of the month, take all the spare change from the jar at the entry, count it, and pick a charity to donate it to 
I then created a pie chart from my spreadsheet so Birch and I could easily reference it. We like to routinely reevaluate what we spend on what to make sure we stay on top of fixed expenses that are usually online automatic payments. For various reasons, most notably frustration with ethical practices, we are planning on switching from our current bank to a credit union. This is going to be a serious process but I think we'll feel better with the end result. Has anyone done this recently? Any tips for an easier transition?

Our Family 2013 Resolution:
Stick to the budget and communicate better about it. Have a bi-monthly meeting to discuss and rearrange that months' goals for our money. Is there anything special we need to spend money on this month? A birthday party? A holiday? An anniversary? Are we spending too much in one particular area? Is something not working correctly in our budget? What needs adjusting?

That's our financial process. It's tedious and boring stuff, really, but it has made a huge difference in the amount of stress in our lives and how Birch and I communicate about money which has in turn saved us from many an ugly fight. I'm sure others have it more figured out than us, but I thought I'd share in case anyone is going through the same process. Feel free to share your thoughts and/or ideas.

May you have a prosperous year!


  1. Thank you so much for this. I appreciate your transparency and honesty, and as our values are aligned it's more helpful than a lot of budget things I see where the advice is along the lines of "clip coupons" -- there aren't coupons for the stuff I buy (though I did just buy 16 lbs of almost too ripe organic bananas at $0.49/lb to freeze for smoothies). I also love the oh so simple and brilliant idea to set aside money monthly for quarterly bills -- every three months I'm surprised by the water and waste bills!

    Your process is inspiring and I am looking forward to doing something similar when we have a better idea of how much Ryder will be making.

    As far as meal planning, I used to cook a different fancy dinner every night. For years I enjoyed this -- I like to cook -- but it got to be too much. So we switched over to making things like a large amount of black bean and roasted veggie soup, or a ton of lentils and veggies, and we eat that for lunches and dinners during the week. Weekends -- or week night evenings when the fancy strikes -- we'll cook a little more elaborately. For me it has been a huge relief, since it frees me up in time and motivation to do other things. This week I've made pet food, fermented radishes, started pizza dough, tended to the water kefir and sourdough starter, and will start fermenting some ginger carrots and we will try to make mozzarella. So... I'm freed to do more cooking, ha. But I want to do all these things, and trying to juggle them with cooking every night is too much for me. It also helps with our expenses: legumes and in-season veggies are cheap, so that leaves us more money for raw dairy, fermented cod liver oil, fair trade coffee, etc.

    Of course, we have the advantage in being able to store lots of food, and a willingness to eat the same thing over & over, probably easier for adults than kids? So maybe not helpful...

    Talking about money is always stressful for us. I would like to do a regular meeting, but we've found that emailing about it works best. Weird, I know, but we can each decide when we want to deal with the issue.

  2. Thank you, R. I'm emailing you my response. It got pretty lengthy... ;)