Positive Pocket Change

Over the past month, my husband and I have used more than 15% less spending money than our usual amount. Also, over the past month, one of our personal investment accounts has dropped more than 30%.

I’m guessing I don’t even have to tell you why either happened.

It’s been in the back of my mind for a while now to share some of our favorite little personal finance habits, and now with an added layer of what is going on around us, I felt there was a bit extra to say.

Starting with what I originally wanted to share: I would really like to emphasize that these are our own personal habits. Neither one of us has any sort of financial expertise, but over the past five years or so, we’ve found our shared personal finance groove. A big part of this was reading about personal finance, seeing what stuck out to us, and actually trying some ideas out.

Most tried and true of these tips? Whether or not you choose to share actual incomes and accounts as a family, I do encourage you to share your financial habits and communicate openly. But you’ve heard that one before, so here’s a look at other habits we find helpful for us.

Budget with Prior Pay

This idea has two major parts in play. First, you have to get to a point where you can do this. Second, always remember that doing this means you do not budget based on what you think the future might be.

Essentially, what I am meaning to say is that, my husband and I choose to set our monthly budget based on the income we brought in the previous month. For example, in January, we are budgeting with December’s money, in February we are budgeting with January’s money, and now for March we budgeted with February’s money. We do this in order to make sure we don’t ever use money we don’t actually have.

When April comes, we honestly have no guarantee that we’re getting a certain number of dollars—I could get hired (fingers still crossed) and bring in more money, my husband could get deployed and we might see separation pay, or alternately there could be any number of reasons for a paycheck to be smaller than anticipated, and we have no way of knowing that until we read the LES or see the deposit in our bank account. So, we decided it makes sense for us to use money already earned as opposed to money anticipated.

Before you do this though, you have to make sure you can. You can come up with many of your own ideas on how to achieve this starting point, but for us, our starting point was our savings. Once we realized we wanted our budget to reflect money we already had for sure, we decided it was worth it to stop touching our checking account for one whole month and pay for our needs that month out of our savings.

Since we are talking about how we budget that prior pay each month, our other habits fall into how we actually do that.

Design your Budget

There are so many ways to do this one and it really doesn’t matter what we do, or your parents do, or your best friend does. As long as you pick a way to make a plan for your money in a way that makes sense to you, then great!

What works for us is part computer use and part paper and pencil—actually pens… yes, I have “money book pens” and that is actually what I call them. I set up our monthly budget in Excel (Auto Sum is so handy, for real) and balance our actual checking account in a notebook. This notebook also helps us track certain kinds of spending in categories—cars, cats, vacations, gifts for others, etc. Our Excel monthly budget form has space for each of those named categories as well as our recurring expenses—rent, electric, internet, Hulu, Netflix, etc., as well as spaces for gas purchases, household purchases (which, for us, include groceries), and our chosen saving opportunities.

I’m not going to lie to you. I don’t think my husband has a thorough working knowledge of my process to manage that Excel sheet or our team money notebook. He does, however, look at and agree with (or disagree with) that Excel sheet every single month and understands that we have certain money set aside for each of those spending categories we set up in our notebook. Within this past year he even pitched his own idea for a category we should have—new technology fund—so I am more than sure that even though I am the one messing with the Excel sheet and writing in our little book, we are teaming it up pretty well when it comes to our dollar bills.

Be Flexible

Now, this one is pretty important. Our budget, our spending, and our savings do not always look the same month in and month out.

Certain things do, sure. Those recurring bills are getting paid. We’re using our decided upon amount for restaurants, fast food, and other entertainment spending—in cash because it works for us.

We’re planning on a set amount of money for the year spent on gifts for others and we spread it out across each month, but someone’s going to get married, or have a baby, or have a surgery, or wind up in the hospital, so this gift spending is always a little more fluid.

There’s also going to be things that just sometimes need to be added in—maybe he needs new PTs, or I need new glasses, or whatever. Those months that we buy something extra, maybe we save a little less and then save a little more on another month.

The thing about your budget is that it is not set in stone. You can change and adjust it as it makes sense for you. The big idea is to still stay within your available money—spend and save what you have and not a penny more or less.

If you’ve gotten this far, I hope you’ve found something helpful in these ideas. Absolutely, I do. But, I bet you are also sitting there thinking, why be concerned with any of this in the midst of what is going on around the world?

Well, that’s just the thing. This could all be for nothing. It really won’t matter at all if my husband or I get really sick. I promise we won’t be concerned with any of this while trying to survive. But right now, today, we aren’t really sick.

Over the last few years our finances have seen a positive change. And today, we find ourselves with a bit more than 15% cash in our little spending envelope than at the end of most months. Maybe you’ve saved some pocket money, too, after staying home for weeks on end. That’s nice—but compared to our world outlook, maybe that might not matter.

What might matter is what you choose to do with it.

Will you take it as a lesson learned that you do actually save money when you stay home more often?

Will you donate some dollars to a cause you personally find worthy?

Will you save it up for the next emergency?

Will you choose to invest it to try to recover some of your losses?

Will you share it with a friend—or a stranger—who had a much harder time getting through this than your family did?

These are things I would encourage you to think on. Whether it be money management through personal financial habits or something else, what we are all experiencing right now might offer you a chance to change at the end of it. My best educated guess is that, right now, you have a lot of changes impacting you that you never thought about. Outside of changes you never dreamed of, you can use this time to figure out something you do want to see change between your before and after COVID-19 life.

We all will, and I hope that through it all, each one of us has some kind of positive change we’ve found to work towards.

Feel free to share the positive changes you hope to make. You might just inspire someone else to change too.