Spending With Purpose: Beginning a Budget Plan
By Jeff from SLN More Blogs by This AuthorFrom the Fashionably Broke Blog Series
After weeks months years of wondering where my paychecks have been running off to every fortnight (Sorry, I just love the word. It sounds like a nightclub for my poor spending habits though, right?), I finally thought it might be time to track my where my money is going. It’s not that I wasn’t trying to be responsible, it's just that I was incapable. I was angry at the world for even making me pay for gas or tickets to football games. I mean come on, I’m a pretty big deal - at least, I would have been if I’d avoided buying things I didn’t need like those extra fancy Jordans, but times change. It seems that responsibilities increase over time (groceries, rent, school, relationships) and money began slipping out of my fingers at an increasing rate. It's gotten so bad that I now opt out of the $1.80 it takes to put that delicious guac on my Chipotle burrito.
No one should have to stoop so low.
Acceptance: The Birth of a Budget
But you know, I got to thinking. If I never have enough money, maybe it’s because I’m the one in charge of it. Even if the corporations are slipping subliminal messages into my head through advertising, it’s nothing more than what they’re doing to everyone else. It would seem that the time has come to form a budget. I’ve heard they do wonders. How would those evil corporations know that sneaky ads would give them enough sales to justify the advertising budget without keeping track of their finances? Maybe black magic, but I’ll opt for a budget!
If you like it then you better put a budget on it!
Needs: Instead of letting yourself get washed out by the tides of consumerism, let’s set down the anchor! Decide what’s worth your money. What can’t you live without? Let’s nail down the bare necessities: food, water, shelter, transportation, internet. This might be a good time to start a spreadsheet.
Wants: Under another section, the “wants,” make some categories. Call them what makes sense to you: entertainment, date night, fast food, clothes to bolster your self esteem, etc.
Savings: Also, set a section for savings. Thinking of a buying a Playstation 4, getting a new car, or maybe even retiring? Retirement may not be in your immediate future, but if you do want to retire at some point, ever, you should consider putting a regular amount away for that.
Now that you have three nice sections, it’s time to decide a time frame you’re going to plan under. You can do this by paycheck or by month. Whatever fits your fancy. Now, take a stab at the amount you want to be spending in each category in that time. Go ahead and look at your last paychecks to see how much you have to work with, but come up with something. You may want to save based on a percentage of your pay. Other things you may want to put a dollar amount on, like food spending, or fast food spending. Just get an idea of where you want it all to go.
Picking up the Breadcrumb Trail
So, now that you have some idea where you want your money to go, it’s time to look where it’s been going. What better way to find where your money is going than to see where it’s been, right? This should be easier with a debit card. If you can’t figure out what you’ve been spending, keep track for a couple weeks. Place all your money spent in the categories you decided on, and see how your spending matches up to what you want to spend. It can be an eye-opening experience.
It might be painful, but monitoring your habits is a chance for change. For instance, if you don’t like how much you’ve spent at McDonald’s, you can make the decision to start packing a lunch for work.
When all your spending is lined up nicely, you can see how ugly it has become, but it also makes it easy to make the progress you need. Just don’t hate yourself; remember that you don’t have to keep doing the same old thing, there’s hope for change. There’s hope for a balanced checkbook. Amen.