You Can’t Save When You Spend What You Don’t Have (How to Get Your Finances in Order When You Don’t Know How!)
Q: How can I save money and get ahead financially when I don’t
know where my money goes or how much is spent each month?
A: I can’t!
While many politicians are busy making income inequality a red
herring selling point in their campaigns for the 2020 election season, they all
miss the crux of the problem -- financial management!
For all the hot air that politicians let out, what they aren’t
talking about to the American people is the importance of understanding how personal
finances work and how to make finances work to a person’s advantage starting
with what they have right now, which I believe is the fundamental basics of
home economics and something all dedicated housewives should be fully aware of.
I was never taught by anyone how to manage my finances and I
had to learn it for myself when I discovered that the spending in my household
far exceeded the income level and left me wondering how we were even surviving.
FYI, giving kids money and telling them not to spend it
all in one place is just like giving kids condoms and telling them not to get
pregnant -- that's not how it works! But I digress.
Have you ever researched when to get food stamps and how do you know if you need them? If you haven’t, maybe you haven’t been where I’ve
been, but it totally sucks hose water to the max and it forms a gnarly knot in
the stomach that can only be undone by facing up to what you’ve done to
yourself -- but I’ll totally take undoing that knot any day over signing up
for food stamps which has never been a life goal of mine!
It was far from fun when I finally started tallying up receipts
only to discover where all the money was going (mostly to eating out and too
many groceries), while at the same time seeing that little money was coming in
through my husband’s self-employment which ate up even more money in licensing, business fees, and supplies.
When more goes out than comes in, there is absolutely no
getting ahead -- and when you don’t know there is more going out than coming
in, there is only debt, denial, and ignorance!
Sure, it’s easy to blame a lack of income on the person who
works hard to earn it, but that is another red herring and not a solution to
the real problem; because the truth is that it takes two to tango and it takes two
to mismanage a household for which they are both equally responsible -- we were
both at fault and we both had an equal share in the blame.
When one person earns the income for two people, I firmly believe from experience that it is
the other person’s duty to manage the income by tracking expenses and budgeting
the income to know exactly where the money is going, which I never did and had
no good excuse not to -- and it’s a skill that I now work at perfecting with
each monthly bank statement, which is something I look forward to so I can see
how well my skills are improving!
For example, in June of 2018, our household spending
exceeded the income by 737% (be still my palpitating heart); but only one year
later, in June of 2019, our household spending was 95% of the monthly income --
it’s totally true that a year from now you will wish you started today and it
applies to financial management!
So, how did that turnaround happen? Not because
of Trump or any politician whether it be on the national or local level, nor did
it happen overnight, nor did it happen without changing our habits, nor did it
happen without arguing and crying (from me) at times -- it's okay to cry though because crying is legal, but killing people isn't!
It happened because I finally faced my financial fears and did
my wifely duty with due diligence by tracking and analyzing our 100% absurd
spending habits, and my husband did his duty by recognizing the dire reality of
our situation once I brought the 100% depressing data to his attention.
After I made the economic case for what needed to be done, he
agreed wholeheartedly and did what had to be done based on the logical and irrefutable
evidence which I presented -- he found steady employment with an hourly wage and
reliable paychecks that would get us going on the right track, and to this very
moment it has worked to our financial betterment!
Granted, at this very moment my husband is recovering from
hernia surgery, but knock on ugly wood paneling it was found to be work related
and 100% of the surgery was covered through his work’s L&I insurance --
which also includes time off with pay while he recovers at home for the next
week!
Work injuries aside, we are in a better position mentally
and financially from a year ago (making less than $40k/year may sound bad but it's better than where we were!), and we continue to do better with every
paycheck due to managing the household money better than we ever did before in
our entire lives including when we made more money -- and we are in our forties and have both been through
bankruptcies before we got married!
We have cut back on spending, we don’t eat out at all any
more, we only do grocery/household shopping one day a week, we are finding
cheaper options without losing quality thanks to online shopping instead of
relying on overpriced stores in our rural area, we are paying down the credit card
without using it, we are strategizing how to take care of older debts once the
credit card is paid off, and we even have more than the recommended $1k in savings
for emergencies as Dave Ramsey* suggests in his Financial Peace University,
which we are now attending online thanks to my husband’s work that offers it as
an employee perk along with a Costco membership which helps us save money on
many household essentials.
For example, I prepare my husband’s daily lunch and lucky
for me he likes the same thing all the time which makes life easier, because not
only have I have mastered making his favorite wrap, but we buy the same items that
get used all the time and the more we buy of an item at once the cheaper it is
-- that is the secret to saving money on bulk purchases, don’t buy what you don’t
use on a regular basis or else it’s likely to spoil/expire before using it!
So, after analyzing the receipts and doing some math based on
the cost and quantity of what we were purchasing, instead of spending $3.99 for
one 7.5oz pack of single-sliced cheese which would last two weeks, we have now started
buying a 2.5lb (40oz) brick of Tillamook Pepper Jack cheese from Costco at a
cost of $7.99, which was purchased on December 21, 2019, and as of this date (2/9/2020)
I haven’t even used half of the cheese brick yet -- nor did it take me forever to find this information thanks to my budget binder and spreadsheet system!
It would take 5.3 packs of the 7.5oz cheese to equal one 40oz
brick; and two packs of single-sliced cheese at $3.99/pack would last four
weeks and cost $7.98, which is one penny less than the 2.5lb brick from Costco
which is on its way to lasting longer than two months; and my husband said
he actually likes the Tillamook cheese better than the single-sliced cheese, which
costs more partly due to all the packaging -- that’s what I call a win-win because it
saves us money without losing quality and it creates less garbage!
Here’s a helpful link* I discovered on how to keep Pepper Jack cheese stored in the freezer; I found this link before we switched to
buying cheese in bulk to make sure the money wouldn’t be wasted and to my
delight the technique works!
None of this would have happened though if we had continued
to spend more than we had, and I wouldn’t have known we were spending more than
we had if I had never gutted up and faced what I feared, and what so many fear and
know nothing about -- personal financial management and being more responsible with one's own money than a politician is with someone else's money!
The ironic truth about personal financial management is just
because a woman doesn’t make the money it doesn’t mean she is powerless when it
comes to making the finances better in her home -- nor does it mean a woman is
not equal to her husband just because he brings home the bacon while she cooks
it (it’s a division of labor, that’s all)!
Every week I continue to find better/cheaper solutions for
the foods we buy and the household supplies that make living through these hard
times better than they had been for quite a few years; and I have good faith
that if both my husband and I continue with our duties as we have been this past year, that things will be even better in June of 2020 and beyond -- knock
on ugly wood paneling that is slowly but surely getting painted so we can sell this place and move somewhere that has higher household median income levels!
A great place to start with understanding what to do to
manage personal finances, and a mindset that has helped me, is to start
thinking of it like a business; because if a business isn’t financially
successful, it’s not a successful business and it won’t stay in business.
And for any woman who has spent more time working in the
world of business than staying home, as I have done, it helps with understanding that taking
care of a home and making it successful is every bit as important as taking
care of a business and even more important -- because if you’re not successful
at home where you live, how can you be successful at work where you visit?
I discovered this short article* doing research a few years
ago and recommend it as a simple starting point for anyone trying to figure out
what to do to get their finances in order; it’s written for small businesses
but can be applied to a home as well: Five Bookkeeping Tips for Small Business
I started tracking expenses by using a simple budget worksheet that I found through Microsoft* that was free to download and that I
use as my monthly ledger to track all the spending/deposits; I compare the
spreadsheet against the monthly bank statements to make sure everything is
accounted for every month.
I really like how the spreadsheet shows a percentage of
monthly spending; my goal is to keep our monthly spending under 100% so that
there is a reserve in the bank that continues to grow for unplanned/emergent
purchases that won’t require us to rely on our other savings -- and I’m pleased
to report that my little system has worked to our financial advantage by
creating a boon of over $1500 by not spending what we don’t have and tracking what we do have!
Thank you for reading, and please stop waiting to get your
finances in order -- you’ll thank yourself in a year!
Stay tuned for more financially informing posts and feel free to leave comments or ask questions if you're just as lost as I used to be (and still am at times).
*no affiliation, just information
References:
https://evepenman.blogspot.com/2019/02/are-food-stamps-in-your-future-on.html
https://www.daveramsey.com/
https://www.stilltasty.com/fooditems/index/17723
https://smallbusinessbc.ca/article/five-bookkeeping-tips-small-business/
https://templates.office.com/en-us/simple-budget-tm02930040