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It’s been 8 years since I crafted my first budget. It was an awful excel spreadsheet with colorful random blocks spewed everywhere. The budget has changed as the hair has silvered, yet one thing has stayed the same, I would be a financial bust without a budget.
I started a budget almost a decade ago when I was unemployed. Since I had no income, it felt like I had little choice but to start tracking where I was spending.
Budget or Bust
Budgeting is the strictest system for balancing spending and savings. When you have a budget, you give every single dollar a job. And your dollars aren’t allowed to trade jobs or work overtime.
For people struggling to keep their spending in check, or who find themselves relying too much on an emergency fund, a budget might be a great idea.BGR
A budget gives insight into what I need to spend and what I can spend. It allows money to be spent frivolously towards things like life list trips and mindfully pulled away from eating out.
Having goals drives why I’m going through the effort of tracking purchases and staying within the confines of a spending limit. If I did it because I thought it was the right adulting thing to do, I would have left it at the curb faster than you can say, creepy Uber driver.
There are many kinds of budgets. I use a strict method but it has the strength of a stout eight-year-old: zero-sum. Every dollar is tracked and the goal is to have zero at the end of the month. The bulk of earnings is saved, which is sent to savings/investing the day the check clears. I save for dreams first, then set aside spending allowances for the phone bill, gas, and restaurants.
Building a Budget
Each month, I use an excel spreadsheet to track how much money I earned (income). Initially, I used pay stubs to give insight. As I have continued along the bumpy road to a financial fortress, I started including every dollar of income from rebates and refunds to passive income and rewards.
Tracking spending is trickier. For one, it’s less exciting to see what’s spent versus earned. Second, unlike income, money spent (expenses) tends to happen often, which means more energy and time is needed to keep track of frequent purchases.
At the end of each day, I add expenses to the budget. It’s easy to take a moment to add an entry to the spreadsheet versus sifting through a mound of receipts once a month. Plus, it shows how much money I spent and how much I have left.
99% of the time, I use credit cards. I pay off the balance every month, which is how I balance receipts like a digital checkbook. Another boon for income with the rewards and fraud protection. There are more reasons to use a credit card than hesitations about abuse.
Initially, it was easy to overspend in all the categories, from food and fun to gas and groceries.
New skills were learned, which was hard, time-consuming, and there was plenty of whining as if my soul were escaping from a tiny opening.
I had to change how I viewed shopping, as a once self-proclaimed shopping hobbyist. Then, I had to fill this vacuum with other skills. It took time and more self-reflecting than expected!
One way I re-establish order in a chaotic spending world is by going on no-spending sprees. I stopped going to cute home décor stores or the dollar store. Instead, I would only visit grocery stores that specialize in food, not a box store that specialized in everything.
I made a list of items needed but would wait to purchase until I had cash ready. Overtime, the saver skills have progressed to level Yoga where I try to repurpose something at home before adding it to the coveted shopping list.
A budget is how I saved $5,000 in 9 months. It’s how I track and reflect on my spending and saving progress. Baby BuLL didn’t know I would someday use it for nerdy bean-counting purposes, but I have data now to leverage future choices.
One uncomfortable example is I used to buy everything on a whim. I would buy fancy glass jars for home décor, purses because they were cute, and stickers because who doesn’t love an owl sticker?
Then, I crafted a budget and had to add each item. Every frivolous expense was moving dreams further and further from reality. But I didn’t realize it until was splattered across 22 multi-colored entries that it was obvious; I had a problem.
A budget was the tool I needed to fix wayward spending before I knew I had a wayward spending problem.
In the 8 years of budgeting 101, I have created an emergency account that buoys finances when bad things happen, paid for a $3,000 trip to Europe in cash, and currently it’s paving the way to early retirement.
One entry at a time.
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