When Matt and I were first married, had no children, and lived off of two incomes we didn’t face very many tough financial decisions. We pretty much bought whatever we wanted — as long as we knew it wasn’t going to get us into long-term debt.
Now, with a family of six, living off of one income, we have to scrutinize nearly every penny we spend. People often shake their heads at us and say, “I don’t know how you do it.” Believe me, there have been many months when I’ve said the same thing. Yet, over the years, and by the grace of God, we’ve learned how to successfully live on a shoestring budget — and the key to all of it has been nothing short of life changing!
But, before I tell you about the one, simple thing that has allowed us to live, successfully, on one income, I want to fill you in on a little background…
You see, Matt and I never planned on being a “one-income” family. No. Our plan was to get married, buy a house, and both work until the mortgage was payed down a bit; then start a family, have two children, put them in daycare and continue living off of two incomes, buying larger houses and bigger cars as we needed (or wanted) them, and live out the “American Dream” (whatever that meant). Isn’t it funny, though, how God often has different plans?
Well, the day we signed our first home mortgage loan, about a year and a half into our marriage, I found out I was pregnant with our first child.
“No problem”, I reasoned. “He’ll be born in July, when I’m on vacation from teaching. I’ll get to be home with him for a couple of months, and when it’s time to venture back to school in September he’ll be ready for day care and I’ll be ready to go back to work.” But…
About two weeks before school was to start, I looked down at our little son and said, “I can’t do this. I can’t leave him with someone I don’t even know!” (we had just moved to a new city and had no family living near us at the time). “But”, I thought, “How in the world are we going to be able to afford our new mortgage, much less pay for all of the necessities of our growing family if I don’t go back to work?”
I quickly broke the news to Matt when he came home, later that night — he actually took it much better than I’d expected…
“Okay”, he said. “If that’s what you want to do. I’m behind you one hundred percent.”
“Really?” I asked, a little stunned. “But”, and I posed the million dollar question, “How are we going to live on one income?”
“I don’t know”, he promptly responded, “But we’ll figure it out”.
That day was the beginning of our journey to learn how to live on a one-income, shoestring budget. In the eighteen years that have passed since making that decision, we’ve added three more children, been through more job losses than we care to remember — including two self-employment ventures (one of which got us into a heap of debt!), and, as you know, moved out into the country where we raise chickens, goats, and all sorts of fruits and vegetables. I can’t say we’ve perfected this “living on a shoestring budget” thing, but we’ve come pretty close, I think.
And, the one thing that has made us so successful:
– None other than the “B” word…BUDGET.
The best money we’ve ever invested was in a book entitled, The Complete Financial Guide for Young Couples: A Lifetime Approach to Spending, Saving, and Investing by Larry Burkett. When we made the adjustment to one income, it was the first resource we purchased to teach us how to live on meager means. Boy, was that a life-changer! For the first time, Matt and I learned about budgeting — how to truly control our resources. One of Larry’s key teachings centered around the fact that it doesn’t matter how much you make, but how much you spend. What a revolutionary thought! We’d never even thought about the fact that a person can make a million dollars, and be in debt up to their eyeballs while another person can make thirty thousand dollars and have a good sized nest egg stashed away just because he spends wisely and sticks to a budget. Larry’s book helped us get started on the road to developing a budget for our family. Over the years we’ve altered and refined it, but not a month has gone by, in the past eighteen years, that we haven’t made use of and, to the best of our ability, stuck to one.
With a budget, not only have we learned to live within our means, but even below our means, which has allowed us to pay for medical expenses when we didn’t have any insurance (yep, even our second pregnancy), pay off $75,000 of business debt (without declaring bankruptcy), save up for a down payment on our current property, create a “rainy day” fund worth half a year’s salary in case of another loss of employment, and cover all of the day to day expenses that are a normal part of everyone’s lives without incurring long-term debt (except for our home mortgage). True, we’ve had to forgo a lot of the “luxuries” that many people are accustomed to. We don’t have the latest and greatest when it comes to technology, we wear a lot of used clothing, drive cars that are at least ten years old, live in a manufactured home, don’t eat out at many places that cost us more than $20 for our entire family, eat a lot of beans and rice at home, and make and do as many things as we can by ourselves.
We’ve learned to be content with everything we own, recognizing that all of it is a gift from God, and we’ve simply been given the privilege of caring for it.
We’ve also learned how not to hold onto things too tightly — what’s here today can so easily be gone tomorrow.
The best thing we’ve done, since we learned to live on a budget, is to develop our own special, customizable “Budget Board”. Not only has it been the absolute best tool for helping us keep our spending in check and reach our financial goals, it has also been a wonderful way to include our children in the budgeting process, and start training them how to handle money in a responsible way, whether they live on a shoestring budget or have millions of dollars at their disposal.
It has a prominent place, right on our refrigerator door, and is used to engage everyone in discussion about how we’re handling the resources we’ve been given for the month.
The idea for a budget board came about because I needed something visual and tactile to help me know exactly how much money I could spend on particular items at any given time. I wanted a system that would tell me, at a glance, how much money I had left in a particular category, and this is the solution we came up with…
The budget board is divided into a series of different spending categories (ours are: housing, groceries, entertainment, auto, medical, school, clothing, giving, gifts, miscellaneous, and saving). Each category receives a fixed amount of points every month (there are one hundred points total that get divided among all of the categories). Each point equals a certain dollar amount (Matt’s net salary, divided by one hundred), and each point is represented by a box on the board. At the beginning of each month, all of the boxes allotted in each category are colored in green, showing that they are fully funded, like the example above.
Then, each time we spend money, the budget board is updated. For example, when we eat out, the entertainment category, after being updated, shows fewer boxes colored in green, demonstrating how much was spent and how much money remains for the rest of the month. It works much like an ATM, in that sense, but the boxes help create a more concrete picture of where we’re at. Like a traffic light, green means “go” and red means “stop”; as long as the boxes remain green, we get to keep spending, but as soon as they turn red (when we’ve overspent) we know to stop. The goal is to end the month with no boxes in red – that not only means we’ve stayed within our budget, but also that we’ve been able to save some of “Daddy’s salary”.
This has been such a tremendous teaching tool in our family! When the kids want to spend money all we have to say is, “Look at the budget board.” From there, they can quickly determine how much money and time are left in the month to help them make decisions. For example, my daughter might ask if we can go to one of our favorite drive-ins and get slushies. She’s looked at the budget board and has determined that “It won’t even take up one point in the entertainment budget”. The rest of the family will then come together to decide if it’s a wise way to spend our money. One might say, “But I wanted to go eat out at a fancy restaurant this month, and that’s going to take at least three points.” Another might chime in, “There’s a movie I think we should all see. That’s going to take a couple of points.” “Yeah”, another might say, “I really don’t think we should be spending our money on something like slushies when we can get something better with our money.” We hardly ever hear, “Why can’t I get that?”, or “It’s not fair, I want that!” Instead, we have a logical, reasonable discussion based on facts and how much time and money are left in the month. The lesson the kids have learned is: you can’t spend what you don’t have, and you need to spend what you have wisely. I trust it’s a lesson they’re going to carry with them into the future, as they start their own families and develop their own budget boards.
In the future, we’d like to be able to make our Budget Board available, online, to others who want to use it. ( If you’re interested, send us a note!) In the meantime, another system we recommend is Mvelopes, an online envelope budgeting system developed by Crown Financial Ministries, a legacy of Larry Burkett.
Whether you’re living on a shoestring budget, like we are, or have plenty of disposable income, living on a budget should be a priority for everyone. As more and more people struggle financially, during these trying economic times, it is so important that they learn to gain control of their money. Developing and living on a budget is one of the best ways to live successfully, no matter how much money you make!
What has been your experience with living on a budget?