For most of our married life, my husband and I have had a very tight budget.
When we were first married and living in an area with a high cost of living (the near suburbs of Chicago), we had $24,000 in student loan debt and $10,000 in credit card debt from getting my Master’s degree and a year of working adjunct until I could get a full-time job. My husband was not working (he was a graduate student and was volunteering in a business related to his field), and I was making a mere $34,000 gross a year.
Every single purchase was carefully analyzed.
Paying for Christmas presents required a few months’ worth of careful savings, and we made our money stretch by carefully shopping deals and discounts. We spent a lot of time at home, and our entertainment came from the library for free.
About five years into our marriage, I had almost doubled my salary, and my husband was bringing in a small income as a Ph.D. teaching assistant.
We didn’t have to be so careful with our money, so we weren’t. We bought things we didn’t need (that we later sold at a garage sale), and we went out to eat several times a week. Besides having more material things, we were no further ahead than we were at the beginning of our marriage.
And now that we have three kids and I have quit my full-time job to raise them, we’re right back to a super tight budget, just as we were when we were married.
Only this time, I welcome the super tight budget because it’s teaching me to be a better money manager.
The Benefits of a Tight Budget – 6 Reasons It Will Make You Better With Your Money
1. You learn how to follow a budget.
When you are in a tight financial spot, you have to follow the budget. There’s simply no money available to go off budget.
When you have surplus money in a comfortable budget, you may simply blow it on things you don’t need or fudge a bit on certain categories and spend more than you need.
True, some people are disciplined and put that money away for a rainy day, but many more are just as content to blow any “extra” money in the budget.
2. You learn what’s really important.
If you don’t have a surplus of money, you learn to more easily distinguish wants from needs.
A smart phone is high on my list of wants for the future, but it’s not needed, so I don’t have one. Cable TV is a want. Food to feed the family every week is a need, but even that is flexible. We love smoked salmon, but in our budget, it has become a sometimes treat, not an every week purchase.
3. You spend your time in different ways.
When our budget was a bit more relaxed, we spent a lot of time eating out.
Now, that the budget is tight once again, we go out to eat less than five times a year.
Although I never thought I would ever say this, I have grown to like cooking and eating at home. Even when our budget improves, I’m quite sure we won’t be going out to eat as frequently as we did before. We’ve had a mind shift that has changed our behavior. Going out to eat is simply not as enjoyable as it once was.
We don’t go out to the movies, either.
Instead, we stay in and watch Netflix together. We no longer mind practicing patience. For instance, I read the entire Hunger Games series, so when The Hunger Games: Catching Fire was released in November, I really wanted to see it. However, we were able to wait patiently until March when Netflix released it, and we saved a nice amount of money by waiting.
When we had more money, we only had one child, and we bought too many things for him–both clothes and toys. I spent a lot of time maintaining all that stuff and storing it. Now even though we have more kids, we try to limit the amount of clothes and toys that they have.
Joshua Becker, author of the blog, Becoming Minimalists, as well as the e-book, Simplify, put it best: “Start focusing less on buying things for your children and start focusing more on just being with them. Your presence in their life speaks of a greater love than anything you will ever buy. When you begin shifting your focus, the downsizing will happen easier. You’ll start to realize that you don’t need all the fancy gadgets to have a happy child, and wonder why you wasted your time and money on those things in the first place” (TimesUnion.com).
4. You appreciate the things you do buy more.
When money is scarce, deciding what to buy becomes important.
Money is a finite resource for anyone, but on a tight budget, it is even more finite. Rather than just buying whenever the whim strikes, you carefully evaluate what you need to buy.
5. You learn to be creative when you make purchases.
If money is tight, running to the store to buy something brand new whenever you think you need something isn’t always an option. You may instead see if you can borrow what you need from a neighbor. You may decide that rather than brand new clothes, you’ll buy your clothes at the consignment shop.
You may even decide that you really don’t need what you want to buy.
6. You make saving a priority.
When you have a good income with surplus money every month, you may lull yourself into a false sense of security and may not make saving a priority. When you know there isn’t much money coming in, you know how important a savings account, even a small one, is.
My husband and I are doing a better job now of saving and building our emergency fund than we did when we were making 40% more than we are now.
Because we have less, we know how important a buffer is. To make sure savings is a priority, I have money deducted every week automatically from our checking account to our savings account earmarked for emergencies. The money just builds, and after awhile, I didn’t even notice that money leaving my checking account.
Most Tight Budgets Aren’t That Tight Compared to Previous Generations
While some people who are living near the poverty level do struggle in very real ways, for most of us, we’re simply spoiled.
We want everything brand new. We want the latest technological gadgets. We want cable television and a nice car.
Is my family’s budget tight? Yes, without a doubt. But we’re not struggling to pay rent or to buy groceries. What we are doing is giving up luxuries, just like our parents and grandparents did years ago before we began to expect so many consumer items.
In previous eras of one-income families, people were used to scrimping and saving. Sometimes a couple might not be able to buy new furniture until they had been married ten or fifteen years. Now, we want new furniture when we go away to college. When we take honeymoons we go to elaborate destinations that families used to have to save for years to travel to. We expect to have two cars when just fifty years ago, most families got by with one car.
We expect everything right now.
We use our credit cards for instant satisfaction, and then we’re mired in credit card debt. Many of us don’t know what it’s like to delay a purchase. We buy as soon as the desire strikes us.
However, when you live on what you earn (or less, ideally), you truly enjoy saving for something and are proud when you can finally buy it.
Recovering from a Tight Budget
My husband and I don’t expect to have a tight budget for the rest of our lives. When he finishes his post-doc and moves into a tenure-track faculty position, we’ll be in a much better financial position.
However, unlike last time when we made more money, we’ll continue to live as we are now.
All the surplus money will go toward building an emergency fund and fully funding our retirement. We’ve not only learned to budget, but we’ve learned the art of patience when it comes to buying things. We’ve changed our habits, so we can now be responsible with our finances regardless of how much money we earn.