Remember Aesop’s fables? The one about the ant and the grasshopper is so important as we navigate through adult life. It’s such a valuable lesson that many people miss even after experiencing the repercussions of being “the grasshopper”. Long ago when we first were married, we lived like grasshoppers- we ate out every night, we took and took and took from the ATM (hey, there’s money in the account, why not spend it?!) and we never thought about the next week let alone the next month or year. So often we found ourselves with very few dollars left over for bills or even worse, the dreaded red ink and parentheses for an ending balance. Finally, we realized we have to get this under control quick!
It did take hitting the proverbial “rock bottom” before realizing this and groveling is not an attractive quality for newlyweds in the eyes of their parents! OK, we are big boys and girls- we can do this. Here’s how we did it:
First, we listed out every mandatory expense we had- that’s student loans (even if you aren’t required to make payments yet), credit card debt, utilities, insurance premiums, rent/ mortgage, car payments, taxes (home and car), etc. Next, the hard part…we listed out every discretionary expense we had. Essentially, we looked at a few months of bank statements to notice the horrible truth staring us in the face from that ugly list. We spent way too much money on stupid things, much of which we ended up pooping out a mere twelve or so hours after enjoying that dinner out.
Next, we took our debit cards out of our wallets and moved to cash only. This was necessary to teach us to stop impulse buying. We felt naked without them but it sure did make an immediate difference! We budgeted for groceries, gas for the cars and any money needed for mandatory expenses due that pay period. Funny thing happened…we had food to eat, gas in our cars and enough money to cover our bills. And an added benefit, there was a little money left over to carry into the next pay period!! We were excited to finally see something other than failure in our bank account and that tiny victory sparked the will to continue.
Once we were used to eating at home, limiting our discretionary expenses and anticipating our true cash requirements, we gave ourselves our debit cards back. I set up a budget in Excel that showed us how our current cash situation would impact our budget down the road. This was extremely helpful during the time we began paying off debt. Paying large amounts on debt seemed like a good idea in the moment because it seemed like the cash was there, but we were able to look down the road to see that if we paid a large sum this pay period, we wouldn’t have enough two or three pay periods down the road to make our standard bills. So we adjusted that payment a little and the debt began to diminish, then disappear. More success!!
The other thing we did was open a few savings accounts- two little accounts that were tied to our checking and our main savings account in a completely different bank (online). The two little accounts were for a vacation fund and an auto repair/ emergency fund. They were tied to the checking so we would have instant access when needed. The main savings account takes 3 business days to access so that instant access or temptation to spend it is gone and the money is safe! We have automatic transfers into each account the morning of each pay day and gradually those accounts are growing. Don’t think that $25 a pay check isn’t worth transferring to savings. Even a small amount is something that adds up quickly and it’s reinforcing the discipline to save.
Now, our transition from silly grasshopper to responsible ant has taken some time to achieve. It didn’t happen overnight and it’s still a work in progress- there’s always room to get better. Good things don’t just happen, you have to make them happen and you have to work at it all the time. Budgeting isn’t easy and it sometimes makes you look and feel like a party pooper. But at the end of the day, you have electricity in your home, food on your table and money in your savings for when your car breaks down or your water heater leaks all over your basement. I can’t tell you how good it feels to not invade your operating funds (checking account) for an unplanned emergency because you have money set aside for just such an occasion!
So all you grasshoppers out there, get started with a budget!!