October marked one year of budgeting with You Need A Budget (YNAB) for me, and it’s been a heck of a ride. Some good months, some not so good, but all of them filled with lessons. And overall, it’s been a great year.
Side note before I get going:
This post is focused on the budgeting lessons I’ve learned over the last year, and not so much on the tool. I have budgeted off and on for much more than a year, and tried a handful of different tools before YNAB, but it wasn’t until switching to YNAB a year ago that I really stuck to it. Stay tuned for a post sometime soon on why I love YNAB so much.
But for now…
Here are 7 things I’ve learned in the past year of budgeting!
1. I spend more on food than I thought.
I spend more on groceries and eating out individually than I do on clothes, or gas, or pretty much any singular “fun” category. And I usually spend about the same amount on groceries as I do on eating out. When I started budgeting I never put the right amounts in these categories from the get-go and kept having to move money over throughout the month, but now I set aside plenty in both of these categories so I don’t end up in a pinch later.
2. But I am completely okay giving up booze. (Well, mostly.)
I’ve gone 3+ weeks without having a drink, and I rarely drink at home anymore. During a really rough month money-wise I quit buying alcohol for my apartment, and never really picked it back up. I still try to keep some around for guests and I definitely still enjoy a drunken night with friends every so often, but on the whole I don’t miss it as much as I thought, so it’s been an easy category for me to cut back on.
3. My priorities are more now-focused than future-focused.
I save some, but not a lot. I max out my employer 401k matching and then go a bit beyond that. I’m going to be fine for retirement but I’m not going to be buying a house or any other big-ticket item any time soon. I’m not funneling more into debt than the minimum payments, so I’ll be paying on that for a while. And I’m fine with all of that.
I’ve got low interest rates so the long-term savings from paying things off more quickly isn’t substantial enough to make it worth it to me. My priorities are on taking weekend trips and living in a nice apartment near work instead of on scraping by now for the payoff later. I got a lot of flack from friends for this view, and still do sometimes, but budgeting and finances are intensely personal and it’s up to you to decide where your priorities lie.
4. But my rent is getting in the way of what I truly want to do.
As I said, I put living in a nice apartment near work pretty high up on my list of priorities, but the rent in my area is high and it’s getting in the way of travel and adding to my monthly stress. I love my apartment, but it’s keeping me from doing what I want each month, and rent is the category that’s got to change if I want my monthly situation to change by more than a degree.
5. It’s always, ALWAYS better to know.
Last December I was pretty new to regular budgeting and I spent more on Christmas (flights, decorations, gifts) than I could afford to. I stopped budgeting for the month because I knew I’d put myself deeper in debt with the Christmas spending, and I didn’t want to face that. In January when I picked myself back up and made the new budget I realized that while it wasn’t actually as bad as I thought it would be, I’d made it worse by not looking at it for weeks. By going weeks without looking at my budget I let myself make impulse purchases (clothes I didn’t need, lots of meals out) that I wouldn’t have made if I’d been staying aware. A mildly-bad budget month turned into a moderately-bad budget month because I turned a blind eye.
6. It’s important to save for things you know you’ll eventually have to buy.
My cat has had two emergency vet visits, and I’ve had a few unplanned medical expenses myself. Christmas comes every year, and there’s always something wrong with the car. Any of these things coming up without prior planning throws a huge wrench in the monthly budget, but if you plan and set aside money for them monthly, it’s no big deal.
I have “vet visits”, “medical expenses”, “Christmas stuff”, and “auto maintenance” as categories in my monthly budget, as well as a few other eventual-expense categories. Every month I put money aside for them so when the actual expenses come around I’m not subsisting on ramen or putting myself in debt. An emergency vet visit or problem with the car is stressful enough, and budgeting ahead takes a lot of the financial stress out of it.
One note: this is different from my emergency fund. This is for somewhat predictable expenses, not out-of-the-blue emergencies. You know approximately what you’ll spend for regular car maintenance and Christmas travel/gifts and planning for it reduces the stress around it. It’s still important to have an emergency fund for the things you can’t plan for!
7. Focusing on the positives helps both your mind and your wallet.
As I said at the beginning of this post, there have been good months and bad months. On the bad months – the ones (yes, plural) where I spent more than I had and put myself deeper in debt – it was really temping to beat myself up about it. But when I quit beating myself up and looked at the positive (I managed to reign in my spending on X category, or I paid of Y amount of debt) I rolled into the next month with a positive attitude and ended up spending less because I wanted to maintain that feeling. Being kind to myself instead of dwelling on my mistakes (a) kept me from putting myself in a bad mental place, and (b) actually helped me spend more wisely.