The Scare of My Life, and Why Budgeting is Important

Since we’ve moved into my dad’s house, our desktop computer is still in storage. Unfortunately, my desktop computer is where I have my YNAB budgeting software. Thus, in the last three weeks, I haven’t updated my budget. At all.

Now, I have checked my bank balance frequently, but as far as keeping track of how much I’ve spent on groceries and gas, I haven’t done a thing. I was going along pretty well, but probably spending too much money on eating out, until last Thursday.

I went to check my bank balance on Thursday, and it was down to $300. (We do have other accounts). For that account, a $300 balance is really low, unless we’re near a payday. Since I had completely lost track of when my husband got paid, I asked him if Friday was payday. He said he didn’t think it was. Notice, he lost track, too.

I panicked. Where had the money gone? How on earth had we gone from a balance of over $1000 a week before to only $300 a week later? Had we spent that much money on gas? Or heaven forbid eating out?

I did a quick scan of our transactions at our bank’s website. I didn’t see anything unusual. Scared that I was going to overdraw my account with some bill I’d forgotten about, I did a quick transfer of money between accounts. I swore that I would never neglect my budget again.

Fortunately this story has a happy ending. It turned out my husband was wrong. The following day was payday, and when I logged into our account early Friday morning, I was happy to see a nice big balance again.

This experience has reminded me of something important though. Though some people think having a budget is binding and restrictive, I’ve found that living by a budget is freeing. When you know how much money you have and where it needs to go, you don’t have to worry about making financial decisions. The decisions are made, and you are free to focus on other things.

If you’re new to budgeting, see my series on making a budget that works. And if you need tools to manage your budget, check out YNAB, Pear Budget, and Gibble’s budgeting spreadsheet.

Do you live by a budget? Is it restricting or freeing?



Author

By , on Sep 11, 2008
Lynnae McCoy I'm Lynnae, wife of one and stay-at-home mom of two. I'm committed to getting out of debt by being frugal with my choices in life.

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{14 Comments}

  1. Rob in Madrid:

    Speaking of budgets one of the biggest mistakes the wife and I made was to beuget for payments and not for savings!!!!

  2. We definately live on a budget. I handle most of the money in our household, but always keep my husband informed of status and what-not. I am very frugal but love my once a year vacations. He spends a tad bit more than I do, but still is frugal. I can’t imagine not living on a budget and not knowing where your money is. I love your site, btw!

  3. SavingDiva:

    I also had to move recently, and I also lost track of my expenses. I’m still trying to figure out how much things will cost down here, but I’m getting a better handle on it.

  4. Rob in Madrid:

    I gave up on using quicken and such like products years ago. I now use a simple spreadsheet only to list the regular bills, a quick glance tells me what still is due. I’m paid once a month so I simply deposit the required amount in each month and forget about it.

    For cash and misc spending (the bugbear of all budgets) I use a simple notebook to mark things down. End of the month I can add everything up.

  5. Jeff:

    I don’t use a strict budget (though I probably should), but I do depend heavily on Quicken’s “scheduled transactions” option to warn me of how much money I’ll have left by the end of the pay period. That strategy left me in much the same situation you’re describing when my computer’s motherboard got fried last year and I couldn’t afford to replace it for 6 months. I ended up with a couple of overdrafts during that period. It was a pretty stressful time, especially in the 2nd and 3rd months… about the time I started to realize I was losing ground and had to come up with some alternate methods to keep a handle on things.

    Let me tell you… Quicken is way easier than tracking by hand, and way less stressful.

  6. There is definitely security in knowing where your money is, and how much you have. Staying on budget allows you to know that those bills are covered, and you don’t have to lay awake at night worrying about your cash flow.

  7. Marci:

    I think budgets are a necessity if you are trying to get out of debt, or to save up for something, including retirement. There comes a time in your life when you are debt free and the budget is not as important as it once was. Funny thing tho, it’s so ingrained into my mind still that I really have to fight myself to spend money on something outside the boundaries of the old budget :)

    That being said, I have $310/month (one check) that is cashed and in my pocket every month. That’s my “budget” for gas, groceries, gifts, grandkids, garage sales and gad-abouting… :) So I guess I’m still on minor budget after all.

    Nice to see Bellen’s note – I thought I might be the only one who doesn’t trust electricity to stay on! I find it a nice convenience, but not a necessity, as it seems I do without it so often, days at a time, a week more than once :) (Thank goodness for my woodstove – heat, cooking, light, and hot water all in one!) I’m in a wind storm, slide, flood area NW Coastal Oregon.

    Yes – I still use an old fashioned paper check register – and NO online banking. But it is convenient to be able to look online and see if a check has cleared or an auto-deposit has arrived.

  8. Lori Drumm:

    I live by a budget. My husband, on the other hand, does not. Very difficult to manage with a joint checking account, let me tell you. We’ve been married for 10 years. We fight about one thing – money. I’m a saver, he’s a spender. I keep praying that one day, we will come to a happy medium!

  9. Bellen:

    Using a computer program for budgeting is a very good idea. But, if your computer is packed away you should have gone back to the old-timey way of writing the info on paper. As to not remembering when your husband’s payday was – a calendar, either wall or pocket, with paydays marked (again the old-timey way) would have eliminated that part of your major scare.

    What would you have done if the electricity went out due to a storm, cut cable, etc? We & our family members have had several times when there’s been no electricity for 3-7 days (we live in a hurricane area, our son lives in a blizzard area and my sister lives in an ice storm area) .

  10. Carrie:

    Yes, budgeting is important. But if having an account balance of $300, the POSSIBILITY that you MIGHT overdraw the account (but haven’t), and having money in another account to cover these costs is the “scare of your life,” you must have had a very disaster-free life up to this point. Personally, I would only categorize death, major illnesses, the inability to feed/house my family, etc. as “the scare of my life.”

  11. Budgeting is the most important thing you can do to keep yourself from getting into financial problems, or to help yourself get out of them. We live on a budget and find it soooo freeing. Like you said, knowing where your money goes each month is such a load off of the mind. Not having to worry about where your money is going (because you figured it out ahead of time) leaves room for other tasks that use mental as well as physical energy, plus it’s just a wise financial principle to live by. Plan ahead and be ahead.

  12. "Mo" Money:

    A budget should tell you where you want your money to go and not know where it went. Good post, it is good to hear of a positive experience that shows us why we need a budget.

  13. Ron:

    It pays to communicate doesn’t it? I transferred some cash to our checking account in anticipation of my wife paying $1,700 toward my daughter’s (growing) medical bills and didn’t tell her. This morning, she announced that she had transferred the $1,700 too.

    Ah, communication. Things go so much more smoothly when it happens! But I am glad we didn’t pay those bills and incorrectly assume the other one had transferred the money. Overdrafts are now $35 at Regions Bank!!!

  14. I completely agree with you. I don’t feel restricted by our budget at all, because we control it. We say how much of our money goes where. But having all of those decisions made in advance not only makes it easier to stay on track, but frees us from the constant worry about money.

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