Becoming a Millionaire: Budgeting, part 2

Part 1: Set your goal

Part 2: Finish what you started

Part 3: What you want now vs. What you want most

Part 4: Budgeting

I talked about budgeting in the last post of this series, but I wanted to be more specific with exactly where we cut spending and how we're saving so much money. Discipline is such a huge part of accomplishing your goals. It's not all about having that million-dollar idea or strategy (though those may be part of it). Creating a disciplined lifestyle has been really important for us in getting closer to our goal.

Cut back

Cable
Make some sacrifices. If you have a hefty cable bill each month, switch to Netflix or Hulu Plus. It's under $10 a month and will still let you have the luxury of having shows and movies available. Why wast money on cable when all you do is flip through the channels anyway?

Personal spending
If you're like me, then you love eating out with friends or treating yourself to an occasional new pair of shoes.  If you're like me again, then you probably don't keep close track of when you eat out, and the numbers add up quickly and suddenly you're way lower in your account than you thought you were. If you're really diligent, you can try to cut back on eating out/superfluous spending entirely, but if you're like me (which you probably are), then that would make you sad. Give yourself a low and specific budget for personal spending. Even make a schedule. Say, "I'm only allowed to eat two meals out of the house per week, and they have to be under $10." If you have an event coming up where you know you'll spend more, then you have to make the sacrifice and save your budget for that.

Groceries
I don't know about you, but other than our mortgage, food is where we spend the most money. Get on a grocery and meal plan. It's hard at first but gets easier as you go. I've set Mondays as my grocery day. If it isn't Monday, I can't buy it. This helped me get really good about planning meals and grocery lists, and I now keep a list all week. As I remember items that we need, I add it to the list. If Friday rolls around and I realize I don't have something I need, then we are having scrambled eggs or cereal for dinner.

It's also helpful because it cuts back on eating out. We used to eat out for dinner several times a week, just because I didn't have anything planned or I didn't feel like cooking. Now, if I plan my meals for the week and stock up on groceries, we eat out less which means less money and calories, and we waste less food.

Wasting food was a huge drain, and I never realized it until I started planning and prepping my meals ahead of time. Certain vegetables and fruits are more likely to get eaten all the way if you prepare them in advance. For example, I chop the romaine lettuce and put it in a big container for the whole week. It's ready to grab whatever amount I need for salads at lunch and dinner. It also helps me make healthier choices since we tend to grab whatever is the easiest.

Freeze stuff. Buy things in excess when they're on sale, then freeze them. Cheese is a great one. It can be really expensive if it's not on sale, plus, if you run out, it's a major staple. By buying more than you need and freezing it, you'll cut back on trips to the store. Same goes for bread and veggies or fruits that you plan on cooking. Wash and prepare/cut them, then freeze them in ziplock baggies so you can grab just what you need. I do this with bell peppers, carrots, broccoli, cauliflower, pineapple, berries, and green beans.

How should you pay for stuff

Credit
I'm not going to tell you to get rid of your credit cards. Some people choose to have them and some people don't. For us, they work. We never have a balance so it never collects interest. We pay it off in full every month. However, we're good about never spending more than what we have. A credit card is not "extra money." Don't treat it like it is. Some people think, "well, I don't have the money right now but if I put it on my credit card I can pay it off later." In my opinion, that is not a smart mindset. If you were to use your debit card, would you overdraft? Then you shouldn't buy it. We use credit cards for the benefit of keeping our credit score high and for the small amount of cash back they send us.

Cash
For some people, they feel more in control when they use cash. I tend to spend less if I use cash (because I like the feeling of having cash in my wallet, so I don't want to spend it all), but the problem is that I can't look online at my bank statement and see exactly what I bought. So here's my system: I keep cash in my wallet and I use it for small purchases like eating out with friends or buying a soda here or there. If I'm buying clothes, groceries, gas, etc., I use my debit card.


Categorize
Decide what categories of spending you will be responsible for, and allot the amount of money you need for those things. Gas, groceries, car maintenance, bills, mortgage, clothes, household fixes, pet stuff, business expenses, etc. should be accounted for. We use mint.com to help us categorize and budget. We can see if we've overspent in any category, and it helps us also see how we're doing in savings.

Fun stuff 
Give yourself a reasonable but low budget for doing fun things. If you and your husband want to plan a date, use that money. If you want to take your kids to the movies, use that money. If you've already used it, don't go outside of the budget. Keep a list of fun things to do that don't cost money so you can still have fun without overspending. Pack a picnic lunch and walk to the park, do an art project together, or go swimming.

Split responsibilities
Some couples share spending responsibilities and some split it. I'm not referring to a "your money, my money" scenario. I'm talking about the actual managing of the finances. My responsibilities are groceries and food, taking care of my car (unless there's a really big fix), and fun stuff. Conrad handles paying our mortgage and bills every month. Divvy up who pays for what so that you each have budgets to consider. Back when Conrad was the only one with set responsibilities, I was totally out of control with spending. I was still responsible for food and gas, but didn't monitor it at all.

Time limits
Like I said, sometimes the number of your budget isn't enough to keep you in control with spending. Sometimes you need to set a time restraint. Only go grocery shopping once a week. Only eat out once or twice a week. Plan it in your calender so you don't stray.

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