Thursday, January 10, 2013

Resolution #1: The Power of the Budget

Here’s the deal:  Budgeting has been my lifesaver.

I always considered myself to be financially savvy.  Before college, my parents gave me The Motley Fool Investment Guide for Teens, one of the best reads out there for anyone who is learning to invest.  Guide in tow, I strolled campus mocking the other freshmen for their ignorance.  They were obtaining debit cards for the first time, and here I was with a brokerage account!

But for all my lecturing on the power of compounding returns, I was still faced with a nasty surprise when I began to work.  Turns out I could give all the lectures I wanted on the advantage of a Roth IRA, but that information didn’t mean anything if I didn’t have any money to save

And I didn’t!  Because I was living totally beyond my means.

So last March I finally made a “budget.”  I put that word in quotes because it really wasn’t a budget at all, just an expense tracker with made-up amounts for what I thought I should be spending.  I’d think to myself, “Hm… $300 a month for food sounds good.  That’s the budget!”

Based on no real data, the limits I put on myself were pretty worthless, and what’s more, I treated them as such.  While I faithfully tracked every dollar spent in 2012, if I went over my “budget” all I did was give a big sigh and say, “Darn…”. 

Now, there were a lot of great things about that budget.  Becoming aware of my expenses almost immediately altered my spending habits – I’m talking, like, that day.  But the bigger point was lost: I wasn't using a budget as a hard line for keeping my spending habits in check.  

This all brings me to my first New Year’s resolution.  The other day I referred to this blog as one resolution, and it is.  To be specific, it’s number five of five.  (We’ll get there in a few posts.)  But what’s first comes first, and here is Resolution #1: 
 I resolve to spend less than my budget this year.

I will do this to save money, to have the ability to pay off my student loan in a speedy fashion, and most importantly, to learn how to live below my means

Now, I’m not going crazy here.  This is not a Spending Fast and I won’t be living on ramen noodles or anything.  But part of the whole living-below-your-means thing will mean sacrifice:  Should I go to this yoga event or go see that movie?  Should I eat at Whole Foods tonight or save up for Roost, the coolest-and-newest-Houston-farm-to-table-restaurant?  Can I get away with doing my own nails?

My great hope – the one that is truly deep in there, guiding this resolution – is that these exercises in self-restraint will actually help me feel pleasure at a reconnection with consuming.  Yeah, that’s right.  I want to like buying stuff again.

So about that budget… What changes await me this year?

The biggest change I’m making this year is USING MY BUDGET TO STOP SPENDING MONEY.  Doesn't sound too novel, I'll admit, but this is the big lebowski.  

The coolest thing about this budget is that I took the time to make it based on what I actually spend.  That's what will make it so gosh-darn useful!  And what happens if I exceed my budget one month?  Well, those “Darn…”s will turn into “Dammit!”s because I’ll subtract the excess amount from next month’s budget.

I'm REALLY looking forward to blogging it up about all the cool ways I plan on saving some dough.   In the meantime, if you’d like to swipe my budget template, I love to give it away!  Just make sure you click on the link and then go to file > download > and download as an Excel file.  Easy as pie!

Until Resolution #2,


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