Budgeting. Does it suck? Yeah. Is it hard? Yeah. But like taking vitamins and flossing, you kinda need to do it.
There are several different ways of putting a budget together. My own approach to it was to use large percentages (i.e., 60% of your income toward life expenses, 20% Savings, 20% Fun Money), and then break each one down into subcategories. If you’re looking for help and some solid advice, I highly recommend www.learnvest.com. They will literally walk you through the process of putting a budget together.
Here are some things I’ve learned so far:
Take Advice but Modify Accordingly If you live in a big city, just be aware that some financial advice out there may need to be tweaked for your own living situation. Some suggested goals for rent and transportation can in no way be met if you live in LA or New York, especially if your job title doesn’t involve the letters “V” or “P.” So don’t give up. Just modify as much as you can.
Mini Monthly Goals Having a budget is like having mini-monthly goals. And that’s just what they are. Goals. So if you don’t quite meet your expectations for saving on your first (or second, or third) month, cut yourself some slack. Even if you only manage to stick $20 into that savings account, it’s better than nothing, and certainly better than being in the red.
Track Every Penny Tracking your expenses is a lot like counting calories. The effect of which can be extremely enlightening (har har no pun intended). You’ve probably heard of the “latte factor,” but it’s true that those little $2 to $3 expenditures can add up to a good chunk o’ cash over a month’s time. By writing down each and every penny you spend, you will become acutely aware of anything you’re spending money on. If you have a habit of looking back on your monthly statement and thinking “Oh, yeah, I forgot about that” (ahem), then tracking your spending will definitely take care of your financial amnesia.
Get Creative and Assertive Budgeting is a perfect opportunity to get creative, to become an active consumer, and to not let companies bully you. I went through a couple different phone calls with a spawn-of-the-devil cable company which shall not be named, eventually having to play the “I’m gonna have to cancel my cable because I can’t afford it” routine before they lowered my monthly cost to something halfway acceptable. Nearly everything is negotiable.
Your Personal Trouble Zones If anything, budgeting will help you zero in on your trouble areas. For me, it’s definitely food. If I cooked at home every single night, then it would make sense to spend lots of cash at the grocery store, and those random bits of parsley and wedges of onion in the fridge that were used for one home cooked meal wouldn’t get tossed out. But cooking every night isn’t really feasible (I have some semblance of a social life and a Mighty Life List to conquer!). So I’m still figuring out the tricky balance of spending just enough money on food, without going over budget and without wasting. Point being, budgeting is and should be viewed as a constant work in progress. Challenge yourself to meet and exceed the goals in your budget!