Speaker 1: Budget Better Bonus Series, Step three Plan for the Future.
Speaker 2: Welcome to the Frugal Friends podcast, where you'll learn to
Speaker 2: save money, embrace simplicity, and liver your life. Here your
Speaker 2: hosts Jen and Jill.
Speaker 1: Welcome to the Frugal Friends podcast. My name is Jen,
Speaker 1: my name is Jill, and this is our third installment
Speaker 1: of the Budget Better Bonus series where we are finally
Speaker 1: actually diving in to budgeting in step three process. That's
Speaker 1: how you budget better. You just have a better, more
Speaker 1: solid foundation before you start.
Speaker 3: You know, we don't love to start with the math.
Speaker 3: There's so much that needs to happen before that. And
Speaker 3: to catch you all up if you're just jumping in now,
Speaker 3: we've been giving some bonus short episodes just twenty minutes long,
Speaker 3: which is what you can expect from this one today.
Speaker 3: Where in the past two we looked at the past,
Speaker 3: then the present, and today we're at the future. This
Speaker 3: is kind of our little Christmas Carol ghost of Christmas past,
Speaker 3: present in future.
Speaker 1: Just to be cute, this is the most ominous one,
Speaker 1: I would say in the Christmas Carol story, but it
Speaker 1: is not ominous here. We do love a good budget
Speaker 1: and we think it can be customized for everyone. And
Speaker 1: the first way we customize it is that we don't
Speaker 1: typically refer to a budget as a budget. And the
Speaker 1: reason why is because that word has a lot of
Speaker 1: negative connotations for a lot of people. If you love
Speaker 1: the word budget, we encourage you to keep using it.
Speaker 1: But if you're like me who has been personally victimized
Speaker 1: by the word budget, I spent years making these perfect
Speaker 1: budgets and never being able to spend in the way
Speaker 1: that I budgeted. I knew what was coming in, I
Speaker 1: made the budget to dictate what was going out, and
Speaker 1: for some reason I couldn't do the things I said
Speaker 1: I wanted to do. And that cycle at month after
Speaker 1: month created a lot of guilt and shame around budgeting.
Speaker 1: So even that was before my husband and I paid
Speaker 1: off seventy eight thousand dollars of debt. While we were
Speaker 1: on that debt payoff journey, we used a budget every
Speaker 1: month and stuck to it very strictly, and I came
Speaker 1: out of that having shame and guilt about spending money.
Speaker 1: Even when I budgeted money for something that I had,
Speaker 1: I felt guilty spending on it because it wasn't the
Speaker 1: quote unquote most efficient or best way to spend that
Speaker 1: money according to financial experts.
Speaker 3: So yeah, it really can feel like deprivation sometimes it
Speaker 3: can feel like the point of a budget is to
Speaker 3: get you to spend as little money as possible. And
Speaker 3: we really like to view it as yes, we do
Speaker 3: need to have a plan, we need to have the
Speaker 3: skill sets to implement that plan, and we need to
Speaker 3: know how we're spending the money. Really, that's what it is.
Speaker 3: It's a plan for where your money is going to go.
Speaker 3: And I think sometimes reshifting the language can help us
Speaker 3: to understand the purpose of it a little bit better.
Speaker 3: So you'll hear us still use the word budget because
Speaker 3: everyone knows what that means.
Speaker 1: Obviously, budget better Bonus series is the name of the series.
Speaker 3: But we also really love to interchangeably call it a
Speaker 3: spending plan so that we can feel a little bit
Speaker 3: less shame and guilt about the fact that it will
Speaker 3: include spending money. That's the whole point of it. And
Speaker 3: what we also want with this spending plan is for
Speaker 3: it to be values aligned, So we talk about values
Speaker 3: based spending a lot on this podcast. It's essentially what
Speaker 3: our entire book, By What You Love Without Going Broke
Speaker 3: is about, and what we mean by our values and
Speaker 3: how we want to spend on That is, recognizing the
Speaker 3: core values that exist for most of us, while also
Speaker 3: knowing that many times we can get after these values
Speaker 3: without spending money. So we'll kind of connect all these
Speaker 3: dots here in this quick little episode, but for a
Speaker 3: refresher for all of us. We have found that for
Speaker 3: the majority of us, we share common core values. The
Speaker 3: things that are most important to us can be summarized
Speaker 3: in the four FS. So family, faith, friends, and fulfilling work.
Speaker 3: We love a literation, we love a good f word.
Speaker 3: And so what we find is that most of us,
Speaker 3: with all of our spending, are spending with our energy,
Speaker 3: are spending of our time, our spending of our emotional, mental,
Speaker 3: physical resources, spending of our money often goes towards these areas.
Speaker 3: That usually what we most want more of is meaningful
Speaker 3: time with friends and family. We want to be able
Speaker 3: to engage in faith practices and spirituality that is life
Speaker 3: giving to us. We want to engage our hands and
Speaker 3: our minds in fulfilling work, and being able to make
Speaker 3: a plan for our money and our time around these
Speaker 3: things can be a really helpful place to start and
Speaker 3: then fill in the gaps with all of the math.
Speaker 3: So we love to start here. And when it comes
Speaker 3: to a spending plan, of course, you know the ninety
Speaker 3: day transaction inventory and the thirty day No Spend challenge
Speaker 3: is going to help you to identify how am I
Speaker 3: spending time in these four F categories? What is getting
Speaker 3: me more of that? Where can I see gaps? Where
Speaker 3: could I get more fulfilling interactions with these four fs
Speaker 3: will be where we begin and then start identifying. Okay,
Speaker 3: then with the money that I do have, how can
Speaker 3: I allocate.
Speaker 1: This so tangibly. How this transforms how the budget looks
Speaker 1: is two ways. First, instead of having categories like groceries,
Speaker 1: takeout restaurants, uh, non grow like non food groceries, coffee
Speaker 1: and all of these very specific budget line items, we
Speaker 1: essentially have five budget line items and we start them
Speaker 1: with the values. So one budget line item is family,
Speaker 1: the next is friendships, relationships, the next is faith, spirituality,
Speaker 1: self care, that sort of thing. And then finally we
Speaker 1: have fulfilling work, so passion projects, continuing education, all of
Speaker 1: this stuff. And then we have like a miscellaneous because
Speaker 1: eighty percent of our expenses are going to be able
Speaker 1: to fall under that, but there's going to be some
Speaker 1: that don't, So then we've got a miscellaneous So instead
Speaker 1: of having just this small miscellaneous category and these all
Speaker 1: these other big specific like tiny specific categories, we've got
Speaker 1: just big groups. It makes it much more flexible. And
Speaker 1: so the second way it changes it is that we
Speaker 1: are not just budgeting money in this spending plan. We
Speaker 1: are budgeting how we spend all of our resources, mainly
Speaker 1: our money and our time. So we also want to
Speaker 1: put our time in there because there's a lot of
Speaker 1: ways when we are first pursuing our higher needs and
Speaker 1: we can do it with time, we can do it
Speaker 1: creatively without money. Then we feel the need to impulse
Speaker 1: spend or pursue these things with money less frequently. So
Speaker 1: we are creating a more flexible, open spending plan, and
Speaker 1: we are not just budgeting our money. We're also budgeting
Speaker 1: our time and sometimes other resources too, so like mental energy,
Speaker 1: physical space. Getting creative with all of your resources and
Speaker 1: seeing how like I want to budget like part of
Speaker 1: my time and part you know, my living room to
Speaker 1: have coffee with a friend at my house. That's just
Speaker 1: like a high level example. But you get creative and
Speaker 1: how you do this, and it is going to feel
Speaker 1: much less restrictive than the old way of budgeting.
Speaker 3: This doesn't necessarily mean that you need to have a
Speaker 3: super complicated spreadsheet, Like we're not saying come up with
Speaker 3: an entirely new way of allocating your money, but that
Speaker 3: when we look at allocating our money and spending it,
Speaker 3: that we are considering all of these other ways that
Speaker 3: we're able to get after the things that we value.
Speaker 3: So it could even be a separate document the things
Speaker 3: that we know we want to be doing with our
Speaker 3: family and friends and with our spiritual practices, so that
Speaker 3: we can kind of know, I'm going to get some
Speaker 3: fulfillment of my needs here, so that here's where I
Speaker 3: can then put some of my money into.
Speaker 1: Yeah, and if you're looking at your budget and you
Speaker 1: like having the different categories very specific, then by all
Speaker 1: means keep it and then just create notes to the
Speaker 1: side that tell you, like which values you're meeting with
Speaker 1: each of these expenses. So it can be done either
Speaker 1: way depending on who you are. But again, like Jill said,
Speaker 1: you could also have a separate one because maybe you
Speaker 1: are married to a person or in a relationship with
Speaker 1: a person who is more flexible and you're more categorical,
Speaker 1: and maybe you need the same budget presented two different
Speaker 1: ways to make it make sense. That is fantastic and
Speaker 1: great and can be done.
Speaker 3: We still have these core tenants that need to be
Speaker 3: a part of a spending plan. We did do an
Speaker 3: episode on the Holy Trinity of money management and that
Speaker 3: includes the three things of income, spending, and investing. So
Speaker 3: these are still going to be important components that you're
Speaker 3: considering when it comes to allocating where your money goes
Speaker 3: and knowing how much money you even have to allocate.
Speaker 3: So we've got to take into consideration the reality of
Speaker 3: our take home pay, and that does fluctuate for many
Speaker 3: of us. What we bring home month to month can shift.
Speaker 3: So we are going to recommend creating a spending plan
Speaker 3: based off of your lowest months. The other months will
Speaker 3: just be bonus and you can allocate the extras in
Speaker 3: the ways that are going to be necessary for you.
Speaker 3: But take into consideration what am I bringing in, what
Speaker 3: am I earning each month, and how do I then
Speaker 3: want to spend that. So some of that, of course
Speaker 3: is going to be on your basic necessities, your bills
Speaker 3: and your utilities and your housing. What is left over
Speaker 3: and how can I filter that in to these higher values,
Speaker 3: and what ways can my discretionary spending align with the
Speaker 3: goals that I have to get at these four f's
Speaker 3: in more fulfilling ways? And how am I also considering
Speaker 3: my investing in savings goals? So we're still considering having
Speaker 3: a fully funded emergency fund and you know, other goals
Speaker 3: of paying down debt and investing. We love to encourage
Speaker 3: you to put investing on autopilot, so this is not
Speaker 3: something that needs to be taking up a ton of
Speaker 3: time and energy for you. Your mind doesn't need to
Speaker 3: be going to this constantly. But you've been contributing monthly
Speaker 3: automatically to a roth ira. You're having contributions taking out
Speaker 3: of your paycheck for R four oh one k. You're
Speaker 3: getting the match. So that's something that we definitely need
Speaker 3: to look at, but it doesn't need to be a
Speaker 3: part of our spending plan that is taking a lot
Speaker 3: of our time and energy to think about.
Speaker 1: Yeah, so time again, we're involving the budgeting of our
Speaker 1: time in this too. So we want to be budgeting
Speaker 1: some of our time to either be increasing our income
Speaker 1: or we need to be looking at our spending and
Speaker 1: saying do I need to budget less of my time
Speaker 1: to creating income to create a more balanced budget overall.
Speaker 1: So these are two sides of the coin that two
Speaker 1: different people may may need to look at. And it
Speaker 1: may just be seasonal too. It may I need to
Speaker 1: take time and make less income right now so that
Speaker 1: I can do some other experiential job or learning so
Speaker 1: that in two years I increase my capability of earning.
Speaker 1: But the dead I take on doesn't negate that increase.
Speaker 1: So again it's looking at the math for spending. We
Speaker 1: already talked about that, and then also for investing or
Speaker 1: saving your emergency fund, whichever one you're on, is when
Speaker 1: you put that on autopilot, you don't need to budget
Speaker 1: as much time. You really only need to budget time
Speaker 1: once a year to reallocate to make sure you're in
Speaker 1: a good alignment with your risk tolerance.
Speaker 3: And when we're doing this after a ninety day transaction
Speaker 3: inventory and maybe even in conjunction with a no spend
Speaker 3: challenge or after a no spend challenge, we have those tools,
Speaker 3: we have some of that understanding of ourselves and how
Speaker 3: we can make this plan that's going to work for us,
Speaker 3: and a plan that incorporates this new skill of spending
Speaker 3: that we are continuing to refine and helps us to
Speaker 3: know what goals should I even be setting here with
Speaker 3: my income and my earning, and what goals should I
Speaker 3: be setting with my habit and impulse spending and just
Speaker 3: all of my different types of spending. What goals should
Speaker 3: I be having with some negotiation efforts on bills? And
Speaker 3: where do I want to be seeking ways to lower
Speaker 3: some of my expenses? And where are there categories where
Speaker 3: I see, oh, I'd love to increase this. What do
Speaker 3: I know is coming up for the future that can
Speaker 3: inform the ways in which I want to set money aside.
Speaker 3: What I set aside into different sinking funds year over
Speaker 3: year will change based on what's coming up that year,
Speaker 3: my goals for that year, who I plan to be seeing,
Speaker 3: how I plan to be meeting some of my family
Speaker 3: and friend core values. So all of that. That's the
Speaker 3: reason we talk about doing these things beforehand, because this
Speaker 3: is just going to be the implementation then for the
Speaker 3: skill set and what to expect with this part of
Speaker 3: our Budget Better Bonus series when we're planning for the future,
Speaker 3: I think we can expect as usual for it not
Speaker 3: to go perfectly, and that is okay. In fact, it's
Speaker 3: great when we're not perfect, because we can learn from
Speaker 3: those things, and we can have grace and permission on ourselves,
Speaker 3: and we can create maybe even more flexibility. Maybe we
Speaker 3: realize with the next month spending plan, I am much
Speaker 3: more of a spontaneous person than I even realize. And
Speaker 3: how do I include that then in my budget? Where
Speaker 3: can I make shifts so that I can have more
Speaker 3: room for some of these last minute activities or invites
Speaker 3: that I love engaging in. But I think what we
Speaker 3: can also expect here is that it will go in
Speaker 3: tandem that our plan will also help us to refine
Speaker 3: our skill set, and our skill set of spending will
Speaker 3: help to inform the plan. That we will get better
Speaker 3: at this over time. But expect to have to continue
Speaker 3: to keep a regular pulse on this, especially in the
Speaker 3: beginning that we are checking this potentially with every pay period,
Speaker 3: definitely at least every month that we're looking at our transactions,
Speaker 3: we're looking at our plan, we're considering our four fs
Speaker 3: and what needs to continue to be refined.
Speaker 1: Yeah, and this is a plan. Just because it's flexible
Speaker 1: doesn't mean it's not intentional and so we're actually for
Speaker 1: everyone who preorders buy what you Love without going broke.
Speaker 1: Before January tenth, we are doing a free class on
Speaker 1: how to make a one year long spending plan where
Speaker 1: we're going to use these principles of budgeting time. We're
Speaker 1: budgeting our money. We're being flexible so that you can
Speaker 1: make sure that you are getting everything you want in
Speaker 1: twenty twenty five in a way that you can afford
Speaker 1: it and feel full. So that is happening January twenty ninth,
Speaker 1: So head to buy what youlovebook dot com to preorder
Speaker 1: that and submit your proof of purchase so that you
Speaker 1: can get in on that Live with Us.
Speaker 3: Do you know what I love to get in on
Speaker 3: Live with You?
Speaker 1: Not the Bill of the Week?
Speaker 3: Nope, the lining round. Okay, we're keeping the vulnerability around
Speaker 3: for these bonus episodes, but we're not doing the Bill
Speaker 3: of the week. So so sorry, there's just not enough time.
Speaker 1: Yeah, So, are there any changes you're making to your
Speaker 1: spending plan next month or maybe in twenty twenty five?
Speaker 3: So for me, I'll answer this for next month. So
Speaker 3: for January, I'm realizing that we can reduce our miscellaneous
Speaker 3: part of our budget, and I keep my spending plan
Speaker 3: really simple it is. It's mostly food related. I actually
Speaker 3: parse out two types of food. There's groceries, and there's
Speaker 3: eating out like restaurants or takeout or any type of
Speaker 3: eating out food. Then I've got miscellaneous and gas and parking.
Speaker 3: So those are my categories for my discretionary spending. Of course,
Speaker 3: I've got you know, my bills and insurances and all
Speaker 3: of that, but as far as discretionary goes, that's what
Speaker 3: it looks like. So miscellaneous includes like everything from paper
Speaker 3: products to clothing to just whatever I want to buy
Speaker 3: that month. That kind of hits that need of spontaneity
Speaker 3: and being able to kind of be a little bit
Speaker 3: flexible with what those things look like, and recognizing that
Speaker 3: I had a pretty high miscellaneous plan kind of month
Speaker 3: over month. Most of this is still carrying over, believe
Speaker 3: it or not, from when we were doing renovations, and
Speaker 3: we've been done renovations for eight to nine months now,
Speaker 3: and I did use our miscellaneous or our renovations sinking
Speaker 3: fund for that, but I still kind of kept it
Speaker 3: a little bit higher so that we could kind of
Speaker 3: buy you know, the extra handles or the cock or
Speaker 3: you know, kind of the smaller things that I wasn't
Speaker 3: going to be pulling out of our renovation sinking fund.
Speaker 3: Now we're just not buying a lot. I don't need
Speaker 3: the amount of money that I have allocated, but what
Speaker 3: I do need is to reincrease our housing sinking fund.
Speaker 3: So we are still recovering from the hurricanes that hit
Speaker 3: us in October, and while we've gotten some of our
Speaker 3: projects done, we've got more projects coming up. Of needing
Speaker 3: to redo the roof on our garage. We'd like to
Speaker 3: add stucco to the exterior of the house, which would
Speaker 3: just help to make it more water proof, because this
Speaker 3: is where our minds are at now, how to protect
Speaker 3: ourselves from future flooding. So needing to increase that sinking fund.
Speaker 3: So making this plan to reduce miscellaneous spending so that
Speaker 3: I can allocate more to the sinking fund and hopefully
Speaker 3: within the next few months be ready to start moving
Speaker 3: on the next projects for the house. What about you?
Speaker 1: So in March, our childcare bill will go down fifth
Speaker 1: dollars a week and I will be changing up our
Speaker 1: budget to allocate that towards investing. So we took a
Speaker 1: drastic drop in our investing in tandem. We had a
Speaker 1: second child and Travis took a lower paying job, so
Speaker 1: that meant we had to stop investing altogether for a time.
Speaker 1: And really the check in with our budget, our annual
Speaker 1: transaction inventory is what kind of tells us, Okay, we've
Speaker 1: banked money. We can put this towards investments. And again
Speaker 1: that's not the way people should start doing it. Investing
Speaker 1: should be an autopilot. We had we have a very
Speaker 1: good nest egg right now and so we can afford
Speaker 1: to like do it the other way around. But we
Speaker 1: were able to max out last year's twenty twenty three's
Speaker 1: IRA kind of like at the last minute where we
Speaker 1: had stopped right but then we were like, okay, we
Speaker 1: check in, we do have the money. Let's just you know,
Speaker 1: finish it off and max it out. So we're going
Speaker 1: to do something again similarly to that. I don't think
Speaker 1: we will max it out this year, but we could
Speaker 1: I think possibly for the twenty twenty five year.
Speaker 3: Yeah, but that was the benefit of you in your
Speaker 3: earlier years being able to have this investing on autopilot,
Speaker 3: so that now you can be more flexible now with
Speaker 3: that higher need of fulfilling work being able to pursue
Speaker 3: that for both of you, so that's excellent. Yeah, thank
Speaker 3: you everybody for joining us for these this little bonus series.
Speaker 3: We hope you liked it. Feel free to give us
Speaker 3: some feedback on it. If you want other little bonus
Speaker 3: extra series kind of short little snippets, feel free to
Speaker 3: let us know we've reviews. If you liked this that
Speaker 3: that would be helpful for us as well. This rounds
Speaker 3: out the bonus series, so there won't be more, but
Speaker 3: we will continue with our regularly scheduled full length episodes
Speaker 3: through the rest of the week. So enjoy that and
Speaker 3: we'll see you in the new.
Speaker 1: Year, and head to buy what youlovebook dot com to
Speaker 1: order buy what you Love without going broke. We talk
Speaker 1: about all these things more in depth and hopefully that
Speaker 1: will help you and inspire you to have a really
Speaker 1: fantastic twenty twenty five financially and just in life in general.
Speaker 3: See you next time.
Speaker 1: Grugal Friends is produced by Eric Siriani.