Do you have a budget? Use the jar or envelope system? Or just try to live within your means?
I’ve been using a budget very carefully for the last two months and the verdict is… I love it! In August, I started by tabulating all my costs – writing down every single thing I bought and putting the number into a spreadsheet. I didn’t use the “jar system” – I still used my debit and credit cards – but recorded everything I spent. I lived as frugally as possible, and then at the end of the month, used those numbers to draw up my September budget.
Here’s how I wrote my September budget:
1. Averaged out my expected income for the next 4 months (until the new year) to give me an expected monthly salary
2. Deducted fixed costs
3. Created a budget for my variable costs. I used categories inspired by Gail Vaz-Oxlade: food, clothing & gifts, entertainment, transportation and other.
4. Using a spreadsheet, I inputted a formula so that at the end of each column I would be able to see how much money I’ve spent in each category, as well as how much I have left to spend. I also created a formula that would show me how much I have spent overall and how much I have left to spend in total. (This is especially helpful when you take more from a particular category.)
The budget is a big stress-reliever. It provides a sense of control. There is an excellent article at Fighting Foreclosure – Conversations on the benefits of having a budget - which is a terrific read. Contrary to what most people say (that budgets deprive you) I find that my budget has helped me to relax and enjoy my spending more, because I know that the items are already accounted for. It’s a bit like dieting – if you focus on all the foods you can’t eat, you’re doomed to be miserable. But if you make a list of all the meals you could possibly enjoy using only healthful ingredients, you’ll feel as though you have an abundance of options. A budget gives a similar feeling – it’s putting focus on the money that you do have to spend, as opposed to what you don’t have.
I recall an episode of Till Debt Do Us Part when one woman asked “do people really have time to [write down everything they spend?"] What’s funny about that comment is really how little time it takes. When I come back from the store, I open up the spreadsheet on my computer and type in the number. That’s it! Done! It’s literally seconds of time for a big pay-off. Like many things in life, it’s all about changing habits. Writing down your expenditures as opposed to just stuffing the receipt in your pocket and forgetting about it does take some energy, but overtime it becomes natural.
Please share – do you use a budget? What’s your system for keeping track of your spending?