Love it or hate it, you’ve got to have it. This is really a business column, but if any of the awesome small businesses or other worthy causes I’ll be directing you to are going to benefit from the attention at all you’ve got to have some scratch. This is easier said than done, because the cost of everything is going up, and making more than our age in salary is a distant, beautiful dream. Most of the advice out there is for people making substantially more money than I am, or anyone I know, so think of this as a basic primer in how not to irreparably fuck up your financial life before the age of thirty.
I’m fortunate to have left the uncertain world of serving for the super-lucrative career of online writing (ha!) but let’s just say that, as of yet, I’m not overburdened with worldly wealth. This means one thing. I’ve got to have a budget.
Don’t look at me like that. You need one too, if you don’t have one already. I put it off for as long as I could, but there comes a point where we all have to be financial grownups, and going without for weeks at a time while waiting for a paycheque just isn’t cutting it any more.
There’s a lot of advice out there about how to “develop a budget system.” Some of them seem okay, some are needlessly complex. Based on some fairly extensive research (I’m a nerd for brightly coloured, friendly personal finance books) here is the best way to not spend (much) more money than you have.
There are three basic laws that if you keep in mind, even if you ignore everything else in this article, will leave you okay:
Law 1: Save something every week. Anything. Even if it’s $5.
Law 2: Credit Cards will eat your brains. They also strangle kittens, stomp on cookies and hate rainbows.
Law 3: Don’t spend so much money. Seriously. Spend less money.
Pretty simple, right? Of course not. Sometimes there isn’t money to save every week. (But there’s usually something even if it’s tiny or spare change) Credit cards have valid uses, like ordering things online or when things get really hairy. Carrying a balance is awful though when I think about the money I’ve spent on interest over the years I could cry. And spending less money just seems so dismal, or impractical, or irrational.
So here are some more details. I have done these steps myself and for the first time in my adult life could survive missing a few paycheques without having to shame myself by calling my parents for a bailout. It’s a really good feeling.
Write down your monthly income. Make note of how often you are paid and how much. For example: Sally gets paid $1200 a month, $600 each on the 1st and 15th. Mike, on the other hand gets paid $1600 a month, $400 each Thursday. Get it? Good. Income includes wages, student loan disbursements any money that comes in every month.
Write down your expenses. You want two columns. One is fixed expenses, which include your share of the rent, phone bill, internet bill, transportation things that you can’t really change month to month. Put all of your other expenses into another column these are the variables, and can include groceries, alcohol, clothes, meals out, smoking, cosmetics etc. You get the idea. Stuff you can control.
Subtract the total of Step 2 from the total of Step 1.
Is the number above zero? Amazing! Make things even better by giving yourself a generous weekly or monthly allowance that will cover all of your variable expenses (Mine is $500/month, for example), take it out in cash from each paycheque and the rest goes to your fixed expenses, savings and debt repayment. You’re good to go. Just make sure it’s enough that you won’t cheat or feel deprived. That way lays failure.
If the number is below zero you need to fix something. Can you lower your fixed expenses? How will you lower your variable expenses? Do it now, because someday in the not-too-distant future you’re going to have to pay the piper.
Play this song – It’s inspiring.
I found that once I started squirreling money away, I wanted to squirrel more and more of it. It’s kind of a fun challenge to see how little money I can spend each month on food, or how long I can go between haircuts. It means that when I find a cool company like Papirmasse, I can subscribe to it, you know? It may make me a more boring person but it makes me a happier, less stressed-out one too. It doesn’t look like money is going to stop making the world go round anytime soon, and I want to make sure that I have some.
Something here not make sense? Think I’m full of BS? Drop me a line at Megan@forgetthebox.net, or tell me in the comments