Having a baby in the house definitely adds new dimensions to one’s spending patterns. Jon and I have been doing our best to prepare for this, and so far we are doing pretty well. Here are a few ways we’ve made creative adjustments to our budget in preparation for Lucy’s arrival.
These tactics might not be for everyone, but they sure have worked for us.
Actually having a budget. Like most folks, we have always had good intentions about paying close attention to where our money goes. Nevertheless, we’ve seen cash go unaccounted for and receipts pile up, waiting to be accounted for. Last year, Jon and I started a new “envelope” budget. Jon designed a database where we can keep track of how money is spent from different “envelopes,” including ones for groceries, gas, dining out, baby goods, etc. All our monthly income gets divvied up into one or another of the envelopes, no more and no less.
Starting January 1, 2006, we got serious about keeping track of every penny. And it is great! The database is really easy to use, and it’s so freeing to know what we are spending money on. It requires a bit of discipline to enter each transaction, but the benefit is being able to see how much money is left in each envelope. My favorite part? Jon and I each have a monthly allowance envelope, which frees us to buy whatever we want. Now I don’t feel guilty when I treat myself to a special iced lattÃ© or a cute shirt — if I have the money in my allowance, that is! One key feature of the budget is a modest amount monthly that we’re putting aside now for Lucy’s education and (dare we say it) wedding. If we didn’t know what we could be spending, we would never feel quite as comfortable saving.
Getting a budget in operation has been the single most important step we’ve taken to manage our household economy.
Becoming a one-car family. I was skeptical about selling our second car when we first started talking about it last year. Jon and I each came into our marriage with a paid-off car, so we’ve always had two. I was nervous about feeling stuck in the house with a baby and no way out. But it really made sense for us, since Jon and I both mostly work from home. Granted, there are times when Jon is away at an all-day meeting and I stick around the house with Lucy, but I’m okay if we have a visitor or two and maybe take a walk in the neighborhood. We didn’t make hardly any money on the sale of that 16-year-old Honda (see photo), but the savings in car insurance alone (not to mention maintenance) has made our downgrade a huge money-saver. It was amazing when we realized we could always take a taxi somewhere (a couple times a week, even!) and still come out ahead.
Planning meals. I don’t like making decisions: it takes me a long time, and it feels like I’m limiting my options. So in the past, when I took a trip the grocery store, I would typically buy more than we needed so that I would have lots of options of things to cook — which inevitably resulted in wasted food and money. Sometime during our pregnancy, I decided to plan out our dinners each week and buy groceries according to that plan. This has had so many benefits: we stay within our grocery budget, we don’t waste nearly as much food (avoiding the tragedy of moldy vegetables ending their short lives in frustration), and instead of asking “What’s for dinner?” each night, we have something yummy already planned. I’m just getting back into scheduling meals now, having taken a break from cooking in the first month or so of Lucy’s outdoor life, and I’m always glad when we have a plan.
Using rebate credit cards. This is a tricky one to recommend, because we know lots of people have problems with credit-card debt. But if you can get to where you never carry over a credit-card balance, then the cards can really start to work for you. Fortunately, this is where we’re at: we get between 1% and 5% rebates from a couple of our cards, and that can add up to as much as $50 of free money a month. Some of this goes right back into the card balance, but some of it we turn into “mad money” via Borders gift certificates. (But watch out, because one month’s finance charges on a rolled-over balance will usually eat up the whole benefit….)
Saving on the big items. In the last year, we’ve made an effort to make sure we’re saving everything we can on the big-ticket items in our economy. It’s great to save 10Â¢ on a loaf of bread, but nobody’s going to pay for baby’s college by doing that alone! In particular:
- When we had the chance, we refinanced our mortgage with a no-fee lender and locked in thirty-year rates, to minimize our payments over the long haul.
- Ditching our second car doesn’t just save us a tank of gas now and then: it puts at least $1500 a year in our pockets.
- Our home-owners’ insurance provider’s rates were creeping up every year, so we kissed them goodbye, and by asking around we found a great agent who is saving us over $1000 a year — and for better coverage!
- We recently took the opportunity to install a high-efficiency furnace and air conditioner. The savings will pay off the slightly higher cost in around three years — and it’s all gravy after that.
Spend it when it’s worth it. The cheapest thing isn’t the only thing. For instance, we’re using reusable cloth diapers, even though they’re more expensive than disposable ones. We live in Chicago even though it could be cheaper to live elsewhere. And we eat Dove bars! The whole point of living within a budget is to live well within a budget. Saving money isn’t everything.
Every household is different, so part of the trick to getting thrifty has been figuring out how our household could get thrifty. Being self-aware, patient, and generous with each other (and ourselves) has kept this process from feeling like stinginess, scarcity, or punishment.
We are guessing that lots of you have tips on saving money as a family. Will you share them?
(Props to Keri M. for suggesting the idea for this topic!)