How To Start A Rural Homestead, Part 3: Budget + Save
This is Part 3 of the How To Start A Rural Homestead series. Before reading this post, I recommend starting at Part 1: Income.
By following all of the steps in this series, and really committing to them, it’s my belief that you can be ready to purchase and live on your rural homestead within two years from beginning the process outlined in this series.
The next step is learning to budget and save your money.
I see so many well-intentioned people struggle with this, and I think budgeting is a concept that people don’t truly understand. This is a shame, because budgeting is crucial to achieving what you want in life.
So let’s dive in, then!
Budgeting = removing emotion from your money
Budgeting is a purely mathematical approach to your money.
First, we need to accept that we are emotional creatures and often make decisions that aren’t rational, but are more whimsical and impulsive.
Of course, we’re brilliant at justifying our emotional decisions as being rational ones.
This is why budgeting is so important— the goal here is to position ourselves strategically, taking control of and designating our hard-earned dollars, even locking them away from ourselves, so that at moments of weakness we don’t blow them!
Spending money on “small things” often is a cycle of instant gratification that a lot of people get stuck in their whole lives, never accomplishing the lifestyle they desire. Just houses full of junk.
To accomplish goals, and especially this goal of having a rural homestead, this has to change.
Replacing the dopamine release of buying things
When we spend money on little knick-knacks here and there, we get short-term releases of dopamine. This is why people develop shopping addictions. The dopamine makes our brain feel good, and we keep repeating the addictive behavior so we can keep getting that little jolt of feel good.
But it’s short-lived and certainly doesn’t equate to real fulfillment or long-term sustained happiness.
Because humans are emotional creatures, and this isn’t changing, I’m not going to tell you to control your spending.
Instead, I’m going to show you how to designate your dollars so that they aren’t around for you to make impulsive choices with in the first place.
You’ve got to hide your money away
The budget I’m going to outline below is going to have you keeping only a small amount of money on you, and that money is going to be a certain amount for a given period of time.
Don’t worry - you’ll still have spending money, if you so choose, but it’ll be a set amount for a certain period of time.
Walking around shops with a $20 bill is a lot different than walking around shops with a debit card to your entire bank account. Doing the latter is certainly NOT positioning yourself for success. So let’s be smart here - just like a recovering alcoholic shouldn’t go hang out at bars, someone wanting to stick to a budget shouldn’t grant themselves access to all their money.
Every dollar has a name
Right now, if you don’t follow a budget, your dollars probably just sort of get moved around from pay period to pay period, on a “let’s see what happens” basis.
Nope - this is not how we accomplish goals.
I’m going to help you give every single dollar a name.
What do I mean by this? I mean that some dollars will have the name Groceries put on them. Other dollars will be named Internet bill or Gasoline. Some will be named Homestead Savings, too, because that’s what all of this is for right?!
If your dollars aren’t given names, they will end up creating their own. Rest assured.
Names like: “30th sweater you don’t need” and “yet another breve latte from the coffee shop”, yes, even “$50 wasted at Goodwill.” Nickels and dimes really do add up.
How I budget
The way I budget my money is probably going to be a little different from how you will. This is because I don’t have regular paychecks on any kind of schedule.
As a self-employed online entrepreneur, my salary is quite unpredictable.
Some weeks thousands of dollars roll in and other times, scheduling makes it so I don’t get paid for weeks at a time. It depends on the amount of projects I have and the size (timeline) of those projects.
So my budgeting is confusing. I mostly work in percentages each time I’m paid. For example, if I receive a payment from a client for $1,000 I will put 25% toward debt (because paying off all my debt is a big goal I’m focusing on right now), 25% into savings, and the rest will go toward bills, groceries, gas, and miscellaneous.
But if you have a predictable paycheck, this will be a lot easier for you.
How to budget your money
This is not rocket science. The numbers are easy enough to understand, the problem people have with sticking to a budget is an emotional / behavioral problem.
I can’t help you with the latter, I can only offer tips.
My first tip is to have an accountability partner. A spouse is great for this, or a best friend. Let them in on your budget and let them check in on you and hold you accountable.
The next tip is to lock your money away so it isn’t easily accessible. I think investing in a good safe for the home is a wonderful way to go about this, or putting money into a savings account so that withdrawals are more difficult. I recommend not keeping money in your checking account, aside from what you have budgeted for bills, groceries, and gas. It’s too easy to swipe that debit card and justify doing so every time.
Set yourself up for success by preventing slip-ups!
Look at your numbers
Get out a sheet of paper, or a Google doc, whatever works for you.
Write out all of your bills. By bills I mean those recurring monthly expenses such as mortgage/rent, electricity, internet, cell phone(s), car insurance, car payment(s), loans, etc. Beside it, write the average monthly amount. If it’s a bill that changes each month, such as electricity, write down a higher average amount rather than a lower average amount. So if your electricity bill is usually around $100/month but sometimes it can be $140, go with $140 to play it safe.
Now think of all the other things you spend money on. This will include: groceries, gasoline, any extracurriculars you like to do like dance classes or a movie. If it’s important to you and you know you want to keep doing it, be sure to write it down so it can get factored into your budget accordingly. It’s important to note that we don’t want to be idealistic here, we want to be realistic. If you realize that you’re spending $1,000 each month on groceries and eating out, you might think: “That is insane! I should not spend over $600 a month on food…” but be careful here, be realistic. If you want to cut your food budget, do so slowly so that you don’t completely miss the mark and give up on budgeting altogether. Even if you have only $50 left over each month to save for your homestead, atleast you know where you actually stand.
Next, think about how much miscellaneous spending money you will need each month to feel content. By this I mean money that you have on hand in case you come across something you really want, or a good deal, a gift for someone, or maybe a DIY project you want to get into, that kind of thing. Think about a realistic number that you’d feel okay about allotting to yourself each month. It’s important to include this in a budget or, it’s my firm belief, the budget will not last and be fruitful for you. I think idealism can ruin budgeting efforts. Be realistic.
Now add up all of these numbers for an Expenses total.
To the side, write down your monthly Income.
So, now you have your monthly income and your monthly expenses. See? Simple math.
Subtract your expenses from your income.
The number that is left over is what you will be able to save each month toward your homestead!
I suggest paying off debt before saving for your homestead as a longer-term fail-safe approach for success, so this amount will either go to paying off debt or saving, depending on which stage you’re in.
Now… do it!
And start as soon as possible.
Here is a budget planner I made which you can download and print each month just as a little reminder of the goal:
I really recommend getting Dave Ramsey’s book The Total Money Makeover and listen to budgeting videos on YouTube, read articles often about frugal living and budgeting, and listen to podcasts about budgeting. These things will help keep you inspired and motivated and reminded daily of what you’re working toward.
Another thing that might be helpful is to sign up for The Sunday Postcard. This is a newsletter I send out every Sunday and one section is a recap of how we contributed to our homestead goals that week. Sometimes it’s monumental acts and other times it’s simply: worked, stuck to budget, saved. It might help to have this weekly reminder of what we’re all working toward — our beautiful rural homestead lifestyle :)
Best wishes to you all and stay tuned for the next part in this series.