I have been keeping a budget since for the past 2 years. I didn't make much money then, I don't make much money now, and I have had some huge financial obstetrical in the meantime. But, I firmly believe that if it wasn't for me knowing where my money is going that I wouldn't have been able to make it this far with the little I have.
I started using the Cash Wallet System about a month ago. My self-control isn't awesome yet and I still borrow money from my grocery folder to by a Diet Coke on the way home from work when it's been a long day (which is NOT part of the system), but I have learned a lot about my finances in the past month and I have also learned a lot about what works for me.
Below are three overarching lessons I have learned that I think can apply to everyone, not just my personality:
1) Adjust as you go
Recently I wrote about a lesson I learned about my lifestyle that resulted in me having $22 left for 4 days worth of groceries. The lesson I learned was that I don't need to split my grocery money into 2 weeks to cover the pay period because I don't like to grocery shop every week. Therefore, the $22 was actually more than I needed for the second half of the pay period because all I really needed was bananas and milk.
The lesson I learned was that I need to adjust my budget every pay period and every month as I learn new things about the way my life works as well as to adjust for changes in the expenses every month.
2) Utilize the things I am already paying for
I have had some pretty big but temporary bills lately that have caused me to make some serious adjustments to my budget. A month ago when I sat down and realized that I have $90 for groceries for two weeks and no money for entertainment I panicked. But then I remembered that I have a stocked pantry and freezer to help supplement my fresh groceries and that there are already things I have built into my life and my budget that I have been underutilized because I've been paying for new things.
For example, I still have movie and restaurant gift cards from Christmas. And I have an Entertainment Book which is the best thing on earth. I pay for the gym, can go to the library for free, and can easily afford to have a friend over for dinner and feed them out of my pantry.
3) Stock up when you have the money
This also goes with #2. I have diapers as an individual column in my budget. I spent $25 a paycheck on a big box that is about 3 weeks worth of diapers and enough wipes for the same amount of time (Walmart brand diapers are awesome!). Because of this I am usually a week or 2 ahead on diapers in case I ever need that $25 for something. I also have a few grocery staples that I keep in the house: spaghetti sauce, chick peas, frozen/canned veggies, peanut butter and cereal. That way, no matter what happens I know I will be able to feed and diaper Odin and I. My savings is kinda pathetic right now because I was off work last summer and have been working on building it back up but I do have enough money to survive for at least 2 weeks with zero income. My tax refund is going to replenish my 3 Months emergency fund that I ended up using this past year specifically because I know now what it is like to really need it.
All this taught me to stay ahead on the staples in case I need to use my reserves. This sounds like a no-brainier, but procrastinating on things like this is easy.
4) Leave room for fun
This was the hardest for me. To give you an idea of where my budget is I want you to know that I made $14,500 last year (this includes the pathetic amount of unemployment I got) I paid $3,600 in student loans and $2,000 for daycare on top of living expenses. Needless to say we live on a tight budget. However, when I try to say I'm going to spend zero dollars on anything besides groceries, diapers, gas and bills it never happens. The honest answer is that I get tired and forget to pack my lunch, or I run out of coffee, or I am too stressed to cook or wait the 75 minutes it takes me to get get home after leaving work to wait to eat.
These things are a natural part of life, and we can't see them as weakness.
Choosing to eat Taco Bell instead of packing your lunch 3 out of 5 days is lazy. Running out of coffee every week and substituting it with a daily $5 latte is lying to yourself. And letting your friends talk you into going out to eat when you have all the stuff to eat at him is being weak-willed. Don't mistake life with actual bad decisions.
But because life happens and we all need a break (or an espresso) sometimes, leave yourself space to be human. Even if I only budget $20 in "entertainment" for the a pay period I know that between Entertain Book coupons and wise decisions that it will be there when I just am too tired to cook or want to go have a drink with a friend on my one night off a week. Because when I don't budget it, I end up using it anyway and it messes up my whole plan.
Overall, a budget should be fluid and dynamic from month to month. You must adjust to what you learn works and doesn't work for your lifestyle just as much as you adjust to new expenses and income.