As you’ve probably noticed, not all of my rules of budgeting are about “the mechanics” of a budget. Some are more about behavior. Taken together these ten tips helped me get and stay on track. This is my second-favorite behavioral trick (my favorite is budgeting less than your take home for fool-proof savings!). This one keeps me on track and allows me to bounce ideas off of someone – my wife. It’s easy because our expenses are united and we only have to work on one budget. But “buddy budgeting” as we’ll call it here at SAFTM (because it’s fun to say) works even better with two budgets between friends, more than one family or family members in different households.
The process of buddy budgeting is helpful in and of itself. It it forces you to reveal all of your inner money secrets (if you’re honest with your budget – which you need to be if you want to succeed with any budget). We’ll use two “budget buddies” in our examples, but it works just as well with more than two.
How it works:
Find someone you’re comfortable sharing information about you with (I’m not talking about passwords or social security numbers or anything like that! We’re talking about that payday loan you took only because you had fallen down a flight of stairs and hit your head on each step twice and how much money you make, have and spend!). This is your budget buddy.
You and your budget buddy sit at a table together. You each agree to keep track of your spending (every penny!) for the next three months. Every week you check in and talk about your spending – sit at the same table! After three months you’re ready to start your budget.
Sit back around the same table. Each of you should have your last few pay stubs and monthly bills (or other expense records). Start with your buddy’s budget (because it’s the polite thing to do). Take her spending records, pay stubs, etc. and start putting her budget together. You’ll learn everything about her finances, but that’s OK. It’s all part of the process. Chances are each of you will be embarrassed about something in your finances.
Step back for a second and think about that pit in your stomach right now thinking about revealing all of your finances to your budget buddy. Just close your eyes and think – what is it about your finances that you wish could disappear. Really do it. This text isn’t going anywhere.
You back? Good. That’s exactly why you need to be on a budget and work with a budget buddy to keep you accountable and motivated. That thing … whatever it is that you’re not looking forward to revealing to your spouse, friend, other relative, is likely your biggest obstacle to financial freedom. I’m not talking about that $12,000 credit card. I’m talking about how you got to the point where you built up a $12,000 credit card balance. I’m not talking about that repo on your credit report. I’m talking about buying a car you could not afford. In other words, that “thing” that you’re not proud of isn’t the problem, but the result of the problem.
Once your budget buddy and you are done setting up your budgets, set a goal for each of you. Set a realistic, measurable goal and a plan for how each of you will reach that goal. Set the first goal for 3 months from the day you set your budget. What is it? It can be anything. It doesn’t have to be big. But it has to be and attainable and measurable goal that puts you in a stronger financial position three months from now.
Some examples of good three-month goals:
- Stop buying coffee and use that money to pay down my lowest-balance credit card;
- Pay off that $600 medical bill on your credit report;
- Cut restaurant spending from $300 per month to $50 (this one hurts a lot of folks);
- Save $100, $200, $500?;
- Buy some term life insurance.
These are just a few off the top of my head. But look at your budget. What expense, that is not a necessity, that you can get rid of. How fast can you do it? Find something to get rid of in three months or less. That can be your goal.
Then set a one-year goal. And figure out a plan to get through that. For example, if you have $6,000 in credit card debt you want to get rid of in one year, write that down on a piece of paper (you can do it on your budget if you want). Then cut it into monthly payments.
In this example, you need to “find” $500 per month. So find the $500 per month with your budget buddy! I know, you may be thinking about where to find $500 per month, but unless you’ve been budgeting for a long time – in writing and conservatively – there is probably money to “find” by cutting things out that you don’t need or cutting things down.
Other ways to “find” money:
- get a part-time job;
- do work around the neighborhood;
- work overtime;
- sell stuff – anything you haven’t used in six months is probably not worth keeping just because you might use it).
Make a plan for each of you and your budget buddy!
Two more budget buddy tricks:
- When you’re done compare your budgets side-by-side. Is there anything in common that you could leverage to save money (i.e. a membership you could share, a commuter pass, carpooling, something you’re good at that she pays for and you could do for free and vice versa, etc.). Note that I’m not sure if these are all permitted, but I’m just giving examples off the top of my head to put some color on the suggestions. Any other suggestions?
- Look at your spending records. What day of the week is the budget-buster day? Mine was Sunday a few years back. I spent a lot of money on Sundays for some reason (shopping and restaurants for the most part). Find that day and cut out as much spending as you can by planning to hang out with your budget buddy that day instead of whatever you normally do. If both of you end up spending $100 on Saturday night by going out to a bar, figure a way to reduce that by hanging out together (chances are if someone is your budget buddy you don’t mind hanging out with them, right?). Go to the bar, but set a limit of two drinks each for example. And eat at home first together. That should cut Saturday down a few pegs. Figure out what works for you.
That’s it for now. Go find a budget buddy! You’ll feel great having someone you can talk with about your mistakes and your plan to turn your weaknesses into strengths. You’ll have someone to help you save and spend wisely. You’ll have someone who holds you accountable. Find someone you trust. I did. It works for me. And remember, if all else fails put the credit card down and slowly step away from the mall!
And don’t forget to check out the other rules of budgeting here:
- My ninth rule of budgeting: Do not raise spending just because you got a raise!
- My eighth rule of budgeting: Budget for emergencies and define emergencies in writing!
- My seventh rule of budgeting: Prioritize and list items in order of priority!
- My sixth rule of budgeting: Budgeting does not have to be complicated!
- My fifth rule of budgeting: Audit yourself!
- My fourth rule of budgeting: Budget for the future, not for the past!
- My third rule of budgeting: Budget for Savings!
- My second rule of budgeting: Don’t budget your entire take home!
- My first rule of budgeting: Write it Down!