Life is full of opportunities where we have the choice to take one road, or another. We can make wise decisions or unwise ones, and far too often we take the wrong road. We say the wrong thing to our spouse, we buy the wrong product, or we don't give enough to those in need. Unfortunately we can't go back and changes things, because life doesn't have a reset button. But what if our financial lives could?
Over the past month or so my wife and I have realized that our spending has started to get out of whack, and we're spending far too much money on things we don't need. We've been overspending on things like eating out, entertainment and home furnishings. We've also realized that we're spending far too much on our 10 month old son, for toys, clothing and other things that he could care less about. The thing is, most of the time he's either out-grown the clothing before he's even worn it, or he's disinterested in the toys before he's even played with them for a day or two. We could be spending a lot less, and we knew it was time to take a fresh look at our family budget. We needed to hit our financial reset button.
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Life Gets Busy And The Budget Gets Lost
For quite a while after we had taken Dave Ramsey's Financial Peace University we were using the cash envelope system, along with a zero based budget in order to keep our spending in line. That worked pretty well for a while, until life started getting in the way. When a variety of health issues came along, and then my wife got pregnant, we slowly got away from keeping a close budget. As soon as we stopped keeping close track, things started to drift.
While we knew to some degree that things were drifting, I don't think we really realized just how far they had drifted. Having had an increase in my income over the past couple of years due to the income for this site, I think that rise in income allowed us to mask just how much we were spending. Along with our rise in income, we'd also had a case of lifestyle inflation. But since the income was higher, even though we were spending more than before, we were able to pretend like things were the same.
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I finally realized that things were starting to get too far out of whack this past month when I started entering all of our income and expenses into the budgeting software called You Need A Budget in order to do a review of the software (which I now highly recommend by the way). I realized that we were spending 25-50% more than I thought on some pretty big categories like our grocery budget, spending on our son and on home furnishings. I realized that this was a problem, especially if we wanted to reach our financial goals.
A sensible man watches for problems ahead and prepares to meet them. The simpleton never looks, and suffers the consequences. Proverbs 27:12
After getting all of our financial accounts entered, and a new budget laid out, I decided that it was time to hit the financial reset button and start fresh with our finances.
Have A Budget Meeting
I called a family budget meeting with my wife, and we sat down to talk about where we were, and where we wanted to go. Having done a budget in the past we had some pretty decent numbers laid out of what we have coming in, and what should be spending. I based our new budget off of those old numbers. We then talked about some of our new goals now that our son has been born. Things like saving for our retirement while also saving some for our son's education.
We also talked about how my wife felt to a certain degree that she was out of the loop when it came to all of our financial accounts and insurance coverages, something I hadn't realized before. That lead me to create the “Total Financial Picture Spreadsheet” that I talked about last week, to give her a better idea of where our accounts were, how she could access them in case I passed, and how she could carry on in the event that something happened to me. If you haven't done something similar, I highly recommend doing it. It will give you both more peace of mind.
Now that we've had our budget meeting, we've still got a ways to go before we're completely back on track. Having that first meeting, however, was like hitting that reset button and re-starting our financial plan. We feel like we're now back on the right road, even if we haven't reached our destination.
Life has a way of getting busy and hectic. If you allow all the pressures of daily life to get in the way it can quickly take over your financial life, and ruin even the best laid plans. Just remember that you can always hit that reset button, re-do your budget and start fresh. It's never too late.
Have you ever had times where your budget just fell by the wayside? Were you able to get back into it, and if so, how did you hit your own reset button?
I love the verse from Proverbs — it’s so true.
I set up a budget for the first time in several years about two months ago, and have been living on it strictly — I thought it would make my girlfriend upset on some level, but she ended up enjoying it by cooking meals instead of us going out. It’s been both fun and way cheaper. Sometimes limiting yourself just forces you to try new things. :)
It has truly been a while since we sat down to do this. Time to get back at it because our budget has been shot lately as well.
Such a good post. This resonated with me because our family has been neglected for the last month and I’m starting to dread getting it all caught up in YNAB. The good thing is that my wife is getting more interested, which brings me much happiness as she never was concerned with it before.
Keep up the good posts!
I love the idea of the hitting the reset button from time to time. The more I think about, the more I think it should be an annual thing to have budget meeting and determine priorities. A good time might be after you get a raise, if you get one.
I also think its good to stray from the budget from time to time, not in an unreasonable way, but as a cheat day to reward yourself for following a budget strictly. I think its hard to be disciplined 365, sometimes you just need to shake things up a bit.
I like the idea of a budget meeting as a reset. I always like to think of running my finances like a corporation or bank would. If we had to produce quarterly statements of our finances for all the world to see I bet we would be a little more cognizant of our spending. Nice post.
While doing research for my book Financial Reset I came across your post. I like your idea that we all have a choice to hit a reset button and start over. The idea behind my book is this what if everything you have was turned into cash would you go back and buy everything you had before. Just about 10 out of ten have said they would not. So I ask them why don’t you do a Financial Reset?
After more then 16 years in the financial industry I have learned that way too many people have things they don’t want, working at a job they don’t like and do things that they are not passionate about. My advice to people is to hit the Reset Button on their life and their finances to get a fresh start. Every day is a clean slate every one has a chance to do a do over if they so choose. It may not be easy but the rewards are huge. This is from a personal experience at the end it is rewarding to look back at what was accomplished. Thank you for your post.