This month, Mr. and Mrs. FB did something truly radical - we decided, together, to go completely without a monthly budget. Not only that, my friends, but we didn't track our spending - something that our longer-term viewers may find particularly shocking. However, it was a highly educational experience, and it gave us both insights into how we perceive our budget, spending habits, and the balance between short term and long-term goal attainment.
A Word Of Caution
Before jumping in to how we used our money this month, a word of caution seems appropriate. For us, not having a monthly budget was the experiment, not the norm. Both of us have good intuition for how much we usually spend on things, and we didn't go at this experiment with the idea that we could spend as much money as we wanted. We went at it with the attitude that we had just substantially depleted many of our physical, emotional, mental, and financial resources in my period of unemployment and we had new needs associated with those depletions and my new job. Of those resources, we consider financial the least important - another thing that may surprise some of the long-term readers - and we wanted to address it last. I wouldn't recommend this experiment to anyone that hasn't been consistently budgeting for at least a year AND hasn't experience a major life change.
This is the first time in our marriage that we shifted our focus from having the maximum amount of liquidity possible. An intense focus on liquidity was good for us in the first three years of our marriage because we had almost absolutely nothing, and money was one of our keys to having more options. However, we have gradually used that money to acquire things - more furniture, a second car, and a much larger pantry then we had when we bought our first $200 worth of groceries in our first week of marriage.
For the first time, we recognized that if we didn't shift from a liquidity focus to a things focus, we were going to run into trouble because we had needed repairs and maintenance that we had simply ignored in the name of having increased liquidity. We made a list of those repairs and maintenance tasks and decided to give those complete priority over any savings that month. This removed a huge psychological stressor for me as I have always had the mentality that if I didn't save the right amount each month (the amount listed in our budget) we weren't going to have enough when the emergencies came. By physically (digitally?) removing that line item from what-had-been our forecasted monthly budget, I removed an emotional barrier to improving my life.
While we didn't track our spending during this month, I can tell you that most of our "extras" categories didn't change - we spent roughly the same amount on entertainment, eating out, and socializing as we have in other times of dual employment. What did increase was the spending in the "essential" categories - groceries, household supplies, cleaning products, and more. This was completely in line with our goals. During my period of unemployment, we had worked hard to make sure our liquidity stayed as high as we could make it, which included eating primarily out of our food stores and freezer and using (without replacing) everyday items like toilet paper, tissues, and cleaning sponges. That was the wisest thing to do then because we had no guarantee of me getting a job as quickly as I did, but the wisest thing to do as soon as that income was guaranteed was to replace what had been used.
Effects on Future Budgets
Having this experiment has definitely changed the way I perceive our monthly budget and how I use it. For example, in coming months, I'm going to change the way I use the columns of my handy dandy spreadsheet - I'm going to let the "current" and "modified" columns represent a range of possible spending values for a given partition of the budget that I would be happy with, with "current" being a low estimate and "modified" being a high estimate. This frees me from the psychological stress of not being on budget for reasons that are simply part of life. Occasionally, another 50 pound bag of beans needs to be purchased, a headlight in the car goes out, and there is an unexpected celebration that would be enhanced by taking an additional meal out - and that's okay! Instead of trying to always hit the lowest end (the "current" column) in everything, I can aim for a 75%/25% ratio where we hit the low end of our target on roughly three quarters of our categories and the medium-to-high end in the last quarter. This reduces the need to try to minutely plan each month and reduces month-to-month finagling of numbers (although I still intend to continue tailoring the budget to each month).
As part of our experiment, we had a frank conversation about our feelings regarding our possessions and whether there were physical things we could acquire that would simplify or ease our lives. After generating a list, we agreed that we would put all of the things on our Christmas list, buy some now, and continue giving gifts to each other throughout the year, including on holidays such as Mother's Day, Father's Day, and Independence Day when gifts are not necessarily traditionally exchanged. This will, of course, affect the gift budget size that we have in the upcoming months - between holidays, birthdays, and our anniversary, we intend to purchase at least one gift for ourselves per month for 2021.
I think this will work well for us for several reasons. Mr. FB and I have fairly simple wants. We don't desire too many things, and we want the things we do have to require little maintenance. We do want to build up our non-financial reserves, including the emotional reserves that have been particularly bludgeoned by having to graduate college, move, start a job, leave a job, and begin another new job in a 3 month period during a global pandemic. In this sense, loosening our budget to provide a range of acceptable activity and acquiring possessions to improve quality of life is a form of self-care as it reduces stress.
I spend most of my spare time playing with spreadsheets, my violin, or planting vegetables in my garden in hopes of bringing new insights into frugal living. Please enjoy, and don't forget to sign up for our monthly newsletter here.
Disclaimer - Mrs. FB is not a financial advisor. Nothing in these articles should be construed as investment or other professional advice, but rather personal opinion. Some links in these posts may be to affiliate sites - no products are advertised through this site that have not been personally used by the FB family unless expressly labeled.