We use this great budgeting software called You Need A Budget (YNAB). When we first started using YNAB, we used it for expense tracking only. I didn’t want some software app (or my husband) to tell me what I could and couldn’t buy. I was already a practical spender…most of the time.
When we finally shifted over to using YNAB to budget “the right way,” what a difference! I knew what every dollar was for. When I didn’t have enough grocery dollars at the end of the month, no worries! I just “whacked a mole” (the secret to YNAB success) and shifted a few extra bucks from another category.
Early on, I really struggled with what to do with the extra dollars in the budget. There weren’t many, but if I allowed myself $50/month for clothing and only spent $40, why bother carrying over the extra if I’m not saving up for something? So, I started stuffing those extra dollars into next exciting jobs, like saving for a car, or a kitchen remodel, or vacation.
Because we have decent incomes and no debt, I was able to assign dollars to these new jobs in a way that they quickly added up. Now that most of these big jobs (new cars, new kitchen, college funds, etc) are fully-funded, there is only one big job left to focus on: EARLY RETIREMENT! So I created a category for it, and I now stuff all the extra dollars there! I do carry balances in some categories…things that need to accrue over the year, like gifts, heating oil, property taxes, etc.
Over the last few weeks, I’ve been wondering how this might change my budgeting. In addition to adding $4k to our 401(k)s each month, I also allocate $4k to the job of earning my early retirement. Sometimes it’s a bit more, sometimes a bit less, but that’s the target I need to strive for if I am going to achieve #500in5.
BUT…what if I worked my budget from the opposite angle, funding each category with a minimum, rather than likely, amount?
For example, my YNAB data over the last six years tells me that we spend $720 each month on groceries. What if I fund this category with “only” $400 next month and try to eat all the extra things accumulating in my freezer and pantry shelves? What if, instead of funding our entertainment category with $150 each month, we go for a family hike or play more board games?
What if I give up on my fear of NOT living my life to the capacity my already-practical budget allows and discover that I have an even fuller life? Something to think about!