I know what it’s like to live on a tight budget. I remember the day my wife and I came home from our honeymoon. I logged in to our bank account online for the first time as a married person. Don’t ask me how I did this, but I completely lost track of how much we were spending while we were gone. We had not only spent our entire budget for the trip. Overdraft protection had set in and our savings account was completely drained! More, our checking account was in the red by almost $2k! I wanted to hide in the closet, but someone had to tell my wife that we couldn’t spend ANY money…for like…two months!
You’d think I’d have it all figured out now that we’ve been married almost 10 years. But, just a couple of weeks ago I sat down to take a long-overdue look at our finances. I had noticed that I was having to transfer money every few weeks from our savings account to stay on top of our expenses. I had thought the trend was because of some one-time expenses on our vacation. But, when I crunched the numbers I realized the budget we had been operating off was flawed. We were planning to spend more money than we were planning to make. As a result, we’d gone through much of our savings!
So, now it’s catch-up time. I need to figure out a way to get some money back in savings and still provide for our family. Maybe you’re in the same place. Here are some things I’ve learned about navigating through a tight financial place:
1.) Attack EARLY or Attack NOW. This is where I tell you to do what I say, not what I did! It’s usually easy to see the signs of a personal financial shortage (bank accounts going down / credit cards going up). However, we all have a tendency to avoid facing it. We hope it’s not true. Sitting down and taking a hard look at the numbers means having a reality check about our situation. It’s not fun. But, the earlier you can get on it, the better. Usually, the earlier you start planning for a financial squeeze, the more options you have. When you’re responsible for a family, you can’t just stop spending money. You’re better off with extra time to move in the right direction. So, don’t put it off! Attack the problem early. And, if it’s too late for that, then attack the problem now!
2.) Make the numbers work. Sit down with a piece of paper or a spreadsheet. List your income and subtract your ideal expenses. I know, it’s terrifying! Mine was several tens of thousands in the red…but hey…those were my ideal expenses! Now start making changes until your expenses equal your income, and don’t settle for anything else! Some suggestions:
- Make changes! You can’t do what you’ve always done and expect different results. Something is going to be different when this process is over. So, be prepared to accept that.
- Don’t just look at changes to your expense columns. Look for additional income. We decided to give up our basement and take on a tenant to help us through this financial season. What could you do to bring in additional money? A second job? Yard sale?
- Do something radical. Desperate times call for desperate measures. I decided not to spend money eating out for the next six months. It will require a lot of planning and self-control, but it’s just radical enough to make a big difference in our budget.
- Plan for generosity. Being generous is like planting seeds in the ground. Don’t plan to eat all of your seed in a financial crunch. If you do, you’re just ensuring that the season will never end. Keep tithing. Keep giving. The harvest from your generosity will eventually get you out of this!
- Leave room for God. There are some expenses that I’m not ready to give up on, but I can’t fit in my budget. I move those expenses to a separate column and ask God to take care of them. I don’t plan to spend it, but when extra money comes in, I know where I want it to go. My wife and I will pray over the expenses in this column and ask God to provide for them. This time around, I have about $70k in my God column!
3.) Stick to the plan. Once you’ve got everything working on paper, go ahead and commit to it. Figure out a way to allocate your income and track your expenses to stay on top of it. I use an online software called mvelopes. Find something that works for you and don’t deviate from your plan. Just a small amount of faithfulness in this will pay off big time.
4.) ADAPT often. Income changes. Expenses change. Update your plan regularly so you don’t get lost. Make the most of changes for the better and attack changes for the worse. Your preferences also change. Remember, your budget is there to serve you. You don’t need to serve it. Make changes to suit your changing preferences. Just don’t do like me and plan to spend more than you have! 🙂
There’s a lot more to say about all this. But, that’s enough for now. What about you? What do you do in a financial tight spot?