I believe in paying attention to your money. I think that how you care for it and what you
spend it on make a difference—not only for your own piece of mind, but also in
the context of the universe and energy and whatnot. Money ignored is money that won’t be around
for long. So here’s an incredibly long
and detailed four-part series about how I manage my money. To see the entire series look for the tag
“Money.”
I have a budget.
My first forays into budgeting involved a modified envelope
system. I was working at Pizza Hut in
high school and I had three categories.
Savings, spending, and my favorite category: saving up for something good, which I called
SUSG. The percentages are hazy, but I
think half of my pay went to savings, and the other half was split between the
spending/SUSG category. I don’t actually
recall what “good” things I was saving up for, but I think they were items like
clothing that cost more than $50.00 or do-dads I bought from catalogs. Ah, the life of a middle-class teenager, when
everything is covered except for extras.
Still, that savings category meant that I could offer to kick in money
for my college education. My mother
suggested I keep it instead and use it to live off of. This was rather brilliant on her part as I
blew through half of it in a freshman freedom spending orgy. Unlike many
freshmen, nothing was spent on drinking or drugs as I lived on a dry campus,
didn’t drink and wasn’t into drugs. There
was, however, a lot of catalog buying. At the end of the first semester, I
found myself horrified at my spendthrift ways, reigned myself in and from then
on paid for most of my expenses while in college. Granted, my parents were paying my tuition,
room and board, and later rent, but I managed to work enough to procure my own
supplies, clothing and sundries and, when I moved out of the dorms, food. I kept an eye on what I was earning and what
I was spending and I think this was a good stepping stone for supporting myself
in my post-college life.
My budget works for
me.
My budget now is inspired by two systems: Your Money or Your Life by Dominguez
& Robin. I also use the 50/30/20 principle
first proposed in the book All Your Worth
by Elizabeth Warren and Amelia Warren Tyagi.
Your Money or Your Life
teaches you to think of your money in an entirely different way and I feel it
is recommended reading, even if you don’t follow the program exactly as
planned. What YMYL does is teach you how
to personalize your budget to your spending patterns. Before this book, I would buy notebooks at
the store with pre-made budgets. I loved
them, because they had a sense of order, but I usually quickly grew
disillusioned as the categories didn’t fit me.
They always included a line for “childcare” that I didn’t need. I crossed it out and wrote in something else,
but the pencil line through the printed text annoyed me.
With YMYL, I tracked my own spending and created a budget
filled with categories I actually used.
I dropped the entire budget into an Excel spreadsheet and have been
using it ever since. Not the same one,
of course. Any time something changes
financially—every six months or so, but as often as every three or four
months—I revise the budget, changing amounts or sometimes even adding or
subtracting categories. My categories
are pretty detailed and split into several sub categories, see below for a
complete listing. Despite my
thoroughness, I believe you can have a budget with as few as five categories:
Savings, Food, Shelter, Clothing, Misc.
However, those categories are going to become unwieldy, unless you make
very little money.
I like the 50/30/20 principle because it gives me a good
idea of how I should be spending (and saving) my money. Before I read this book I would always wonder
if the amount I spent on groceries (or whatever) was too much. In this system, Warren and Tyagi propose that
20% of your net pay goes into savings, 30% is spent on wants and 50% is spent
on must-haves. They define must-haves as
the bills you have to pay month after month and wants as some fun money right
now. 20% goes toward saving for the future.
Though I was attracted to the 50/30/20 plan’s big emphasis
on saving and the firm, and large, percentage, I don’t want you to think that
I’ve got the plan implemented. However,
I just reviewed my budgets since I adopted the program and I can tell you that
since May of 2008, I have only met the percentage goals with two of eleven
budgets made during that time. So it’s
still a stretch goal for me. This may be
because I work a 32-hour week, but am still living as if I work 40.
Current budget categories
Food
Subcategories of groceries, joint groceries, dining out and
garden supplies.
I’m thinking of adding a further category of “sweets”
because my dining out category has been over spent a lot the last few months
and I think it’s due to the cookie habit I have formed. The food category as a whole has been tough
the last few years. I’m budgeting much
more than I ever have, but still struggling to keep expenses down.
Shelter
Mortgage
This is a joint category.
I’ll talk more about how we handle the joint expenses later.
Bills
individual categories:
student loans, school, cat, car, house holding
The “school” category came about when I was paying for a
certificate program to add to my degree.
It has not yet gone away, but has been reduced to a minimal amount. The “house holding” category is for
maintenance of my household supplies.
Like a woman with a dowry, I bring all the kitchen stuff to the
relationship. I aim to take all the kitchen stuff with me from the relationship
if it ever comes to that and I don’t muddy the waters by buying anything with
joint funds.
joint categories:
phone, land lease, life insurance, homeowners insurance,
garbage, electricity, water/sewer, yard, internet, saving up for big
appliances, joint savings, joint vacation, dates, household supplies,
furniture/decorating, cleaning.
The “cleaning” category is how we pay ourselves for
housework completed.
Clothing
Work, fun, sport
These used to all be separate categories, probably because I
was in my 20s. Now it’s all just one
thing.
Transportation
Bicycle
This category used to contain a category for public
transportation, but I’ve been lucky that my employer has provided a monthly
transit pass for the last six years. I
guess the “car” category from bills should go here, but I haven’t ever moved
it.
Health
Personal care, doctor/drugs, gym
Personal care is all the “stuff” to maintain me, like
toothbrushes, shampoo and tweezers, etc.
Recreation
Plays and lessons, vacation, newspaper, computer, random fun
things to do
The plays and lessons category used to be horribly overspent
until I spent a year pledging not to take any classes. Now it is only moderately overspent now and
then as I want to see more plays than I budget for. That said, it’s a very minimal amount
budgeted each month. I would love to increase it. “Random fun things to do” is
my general spending money each month. I
found it easier to lump the movies, the occasional book bought or entrance fee
paid in one category than to make separate categories for all of these items.
Gifts
Personal gifts, Christmas, public radio donation, church
donation.
I have a budget amount for family/friend birthdays and a
budget amount for Christmas.
Savings
3 month
I could technically rename this “8 month” because I finally
met my three months of living expenses saving goal. But I like the historic flavor of it.
