I’m terrible at budgeting. It’s a hard thing to admit, given that I’m supposed to be some sort of expert on financial stuff. I’ve tried apps and books and spreadsheets and everything else you can imagine. And I always struggle. I understand the concepts. I know what I’m supposed to do. I’m supposed to categorize things and track things and spend less than I earn. It’s easy in theory and really hard in practice.
I think my big road block is that it’s a really big thing to tackle. Tools and concepts make it easier, but I still just have to do the work. And I’ve made it my resolution to do it this year. But my plan of attack is different this time around. I’m breaking it down into steps. This month I am focused on one thing only: tracking my expenses to see where my money is going. After that is done I’ll be better able to analyze where I am overspending so I can shave my outgoing cash flow. Then I’ll build the budget spreadsheet from there. Then I’ll focus on paying debt. Then I’ll focus on increasing income. Then I’ll focus on saving more. And so on…
It’s a lot of steps and the whole process is going to take a long time. A very long time. Months. Years. Until retirement, probably. But starting is the hardest part. I’ve always done it wrong. When I tried to do all of the things at the same time it became overwhelming and I either failed or gave up. I have promised myself not to let that happen this time. I’m going to take baby steps. And it’s going to be hard. But now that I’ve put it out there, I’m accountable to you for this project. And I’ll keep you updated on my progress. Hopefully we all can learn some things together.
Out of sight is out of mind. Sometimes this is a bad thing (like when you misplace the Mother’s Day card you bought and forget to mail it until Memorial Day). Sometimes this is a good thing (like when you don’t have any junk food in the house and you are forced to eat carrots instead).
Knowing that out of sight is out of mind can be a useful tool. For example, at the beginning of each semester many students receive a large refund of student loan money to use for living expenses for the whole semester. Getting that money out of your normal cash flow will make it easier to make it last the whole semester. One option some students use is to immediately pay rent ahead through the end of the year. Another option (and the one I prefer) is to build a monthly budget (taking into account the amount of money you have) and only allow yourself to use that much each month. Put most of it into a savings account. Preferably a savings account for which you don’t have an ATM card and transferring funds takes a couple of days—making it harder to cheat and withdraw funds early.
You should set up a designated “pay day” when your month’s funds transfer to your more accessible checking account so you have money for rent, food, laundry, and other living expenses. The key to this working is simple: DO NOT PAY YOURSELF EARLY! If you do, you may find yourself subsisting on Ramen and hot dogs during finals. Because money is a finite thing. Unexpected windfalls rarely happen. If you run out of funds and don’t have more coming for several weeks, you’ll be uncomfortable for a while.
Out of sight is out of mind. So put your case books in plain view and stash your money away where it’s harder to get to.
I had the flu the first week of spring semester. It’s a rarity for me to miss three days of work in a row for illness. Especially at a busy time. But the flu is the flu. I didn’t want to share it.
While I was recovering I couldn’t help but think how the flu is like an onion. It’s layer after layer of symptoms. As soon as the fever broke, I realized that I was light-headed. When I was finally able to breathe again, I realized that I was achy. It was just layer after layer of symptoms, and the more difficult outer ones were distracting me from the lesser ones hidden underneath.
Money works like an onion too. Big financial challenges make you ignore smaller ones that really deserve your attention. A giant pile of credit card debt distracts you from the fact that you haven’t started saving for retirement. You worry about your student loan balance so much that you fail to pay other bills on time. You’re so concerned about paying the rent for the whole semester that you forget to budget enough money to buy groceries. There’s always another layer.
Luckily money is a little easier to deal with than the flu. If you look at things right it’s possible to see all of the issues. It’s like taking a knife and chopping through the onion so you can see all of the layers at once. You can (should) make a list of all the different money issues that are concerning you and tackle them in an order that makes sense for you. You don’t have to peel away the bigger outer layers first. A budget (or spending plan if the B word scares you) can help you plan your attack. Putting it all out in writing (or spreadsheet) can make a world of difference in seeing where you stand and where it makes sense to start.
So many things in life are layered like an onion. But with your finances, you are able to chop it up and attack it in a way that works.
Sometimes you have to deal with things that you have no control over. This has been more than clear this week to anyone living in the Carolinas. And it really hit home for me yesterday.
Anyone who has visited me in my office this semester had a chance to see the wrist brace that I’ve been wearing all summer. And yesterday I finally had surgery to repair that injury. The surgery went well and now I’m recovering at home for a couple of days. And while I’ve dealt with the aftermath of anesthesia before, this was my first experience with a nerve blocker. The up side of the nerve block was that I had no pain for 20 hours after my surgery. The down side was that my left arm was completely numb for that same time. I had no control whatsoever over its movement. It was actually fascinating to me. My left arm was just dead weight (which was MUCH heavier than I would have expected!). I wore a sling to support it and just had to live without my left arm for the day. (Teeth and feet become very useful tools when you only have one arm). I just had to find ways to work around the thing I had no control over.
Sometimes you’ll face financial challenges that you can’t control. The unexpected auto repair. The annual tuition increase. The rising price of gasoline. A medical situation. The cost of the bar exam. Air travel for a family emergency. Financial stress can come in any number of forms that you can’t control. But what you can control is how you prepare for and react to these things. A budget. An emergency fund in savings. Insurance. These are all preventative measures to deal with the things you can’t control. Loans. Credit cards. Side jobs. Selling things you don’t need. These are all reactive measures you can take to relieve your financial stress.
We will all face things that we have no control over. But we all have control of how we prepare for and react to these things.
Time and money are a lot alike. They are both limited resources. Everybody seems to need more of both. You often find yourself swapping one for the other. And both need to be budgeted with care.
The beginning of a new academic year is a great time to look at how you are budgeting both your time and your money. It’s kind of a “clean slate” time of year. You have a brand new schedule of classes that you need to plan your study schedule and other responsibilities around. You may have just received a large refund of student aid funds that you’ll be using to cover your living expenses for the next several months.
It’s easy at a time like this to feel wealthy. You have a lot of money in your bank account. You have months before exams. And that’s when it’s easy to make a lot of poor decisions. If you make poor decisions and squander your time, you’ll find yourself trying to play catch-up at the end of the semester instead of heading into exams less frantically and more prepared. If you make poor decisions and squander your money, you’ll find yourself struggling to pay December rent and wondering how to spruce up your daily ramen noodles at the end of the semester.
The best way to avoid these challenges is to spend your limited resources wisely. Both your money and your time. This is best achieved with a plan.
By now you are likely familiar with the assorted tools used to plan your time. An electronic calendar in your phone. Or perhaps an old fashioned paper calendar. Maybe even a Pinterest-worthy bullet journal. Gather your syllabi from your classes. Mark in important deadlines. Plan where you need to be in your outlining process by what dates. With it all spelled out there for you it is much easier to avoid the last minute rush.
Money always seems to be more challenging. It feels like “budget” really ought to be a four letter word, the way it makes people cringe to think about it. But there are a lot of tools available to help you deal with it. Your first step really should be to make sure that your student aid refund is in a savings account. Then decide how often you are going to “pay yourself” from that savings account by moving money from savings to checking (I like monthly, but many prefer weekly or bi-weekly). Divide the money by that many transfers, and that’s how much you have for each budget period. But then comes the hard part. You still have to decide how much goes to each expense. Some things decide themselves for you—you don’t really have any way to control the amount of your monthly rent once your lease is signed. But groceries, clothing, and fun money are a lot easier to adjust. You may want to try an online budgeting program such as You Need a Budget or Every Dollar. Or you may prefer to just create a spreadsheet using Excel in Office 365 or a Google Sheet.
How you go about your plan is as malleable as the “recreation” line item in your budget. But the important thing is that you do it. If you are failing to plan, you might as well be planning to fail. Just do it.
Sometimes you just get stuck. You’re trying to drive in snow and you get stuck. You’re trying to lose weight and you plateau and get stuck. You’re trying to write a paper and you get stuck. You’re trying to get through Couch to 5K and you get to week 6 and get stuck (maybe this is just me…but it has happened to me multiple times). You try to write a Moneywise Tip and get stuck so end up sending it out on Tuesday rather than Monday (ok…this is definitely just me).
Sometimes you just get stuck. It happens with money more often than anyone would like. You put together a budget and you’re saving for bar expenses when your best friend announces a wedding you will have to be in. You have your budget on track and even accounted for winter heat bills when a polar vortex knocks the temperature below ten degrees for two weeks straight, making the big heat bill you expected larger than you were prepared for.
Getting stuck financially is never fun. But it must be dealt with. In a perfect world, you have an emergency fund set aside for such situations. But the world is not perfect. So you may need to adjust other areas of your budget to make ends meet (Ramen, anyone?). Or you may need to use a credit card to get yourself past the “stuck” and then budget to get that paid off as quickly as possible. You may need to reach out to friends or family for some bridge funds. You may need to dig a bit further into the student loan pot. You may need to pick up a few more hours per week at work. You may need to explore “side gigs” such as online surveys or ride share driving. You may need to sell some belongings. But you need to do something to get yourself unstuck.
Being stuck isn’t fun. But there’s always a way to break yourself free from it. You just need to find it and keep moving forward.
I’m usually the kind of person that wants to see how something works for other people before trying it myself. So I’ve been dragging my feet on the whole Apple Pay/Google Pay thing. But if there’s one thing that can drag me into a new technology, it’s the opportunity to save money. So when one of my credit cards started offering 5% cash back for using their card with these services this quarter, I jumped on board.
Most major retailers are equipped to accept electronic payments now. So I set up my Google Pay account and attached the credit card with the 5% cash back. And off to the grocery store I went. Instead of pulling out my credit card at the register, I just tapped my smartphone to the signature pad. And boom….I was done. No signature. No waiting. No exchange of cash. Just tap and done.
This is a whole new world. Very quick payment. No need to have credit cards on my person. I can see this as being very useful when I go out for a longer run or bike ride and might want to stop to buy myself a beverage or snack. And if the vendors at music festivals start accepting Google Pay, I’ll certainly be in my glory.
But on the flip side, I can see this new technology as a bit dangerous to the budget. As we’ve moved from a cash society into the world of plastic, it has become a bit harder to keep track of how much money you actually have available to you. You no longer have to consciously make a trip to the ATM to spend more than you have planned. And the ability to pay by tapping your phone without even digging out a card makes it seem even less like real money.
Additionally, you’ll want to make sure you keep your phone screen locked if you are using this. If your screen is unlocked and you lose your phone, the finder would be able to run around charging up a storm on your account. You should be keeping your screen locked anyway, but this is just another reason to do so.
Electronic payment technology is definitely easy and fast. But it has a down side as well. For now I’m going to give it a thumbs up, but with the caveat to proceed with caution.
Sometimes when I’m driving, the road rage words that jump from my mouth, aimed at the car in front of me, will be, “Do something, even if it’s wrong!” (Full credit for this gem goes to my husband’s grandfather, who spouted an abundance of what we call “Wilbertisms.”) But there’s a lot of wisdom in this particular phrase that goes way beyond the driver who can’t figure out what he or she wants to do.
This is still the season of New Year’s resolutions. I made a couple of them this year. One is to make healthier food choices and to run more, with the goal of running a half-marathon in the fall (which I’ll now be held accountable for, since it’s out there in the blogosphere). The other is to create and live by a budget in an effort to pay down some debt I’ve been lugging around with me.
Right now you are likely thinking in wonder about the money lady who doesn’t have a budget and has a bunch of debt. I know….I know. It’s one thing to understand the principle. It’s quite a different challenge to put it into practice. I know that the secret to weight loss is to burn more calories than you consume. But I like cheese! And chocolate! And pizza! And I know the secret to budgeting is to spend less than you earn. But I like restaurants! And music festivals!
So here we are at the start of a new year. And I’m going to do something. Even if it’s wrong. Because doing nothing will not change anything. If I do something, it may lead to a positive change in my life. Or it may be wrong and lead to a learning experience. But either way, doing something is better than doing nothing.
My “healthier choices” plan includes using my fitness tracker’s app to monitor my food intake and calorie burn. My half-marathon dream is right now in week 3 of Couch to 5K. And I’m currently in my free 34-day trial of You Need a Budget, as well as reading the accompanying book by the guy who created it. I’m not sure how this will go (though I’m sure I’ll keep you posted as I progress). But I know that I’m doing something. And doing something (even if it’s wrong) is better than doing nothing.
Budgeting is hard. It makes me crazy. Paying bills make me stress. And I should know better. I should have my spending under control. I do this for a living, for crying out loud! But I struggle.
I understand the concepts. Know how much money you have. Know how much you are spending on what. Spend less than you earn. It sounds so simple. Yet it’s not.
It’s just like dieting. Consume fewer calories than you burn and you will lose weight. It sounds so simple. But I like chocolate!!!!!!
I’ve had some success in the past using online trackers to help with weight loss. So it makes sense that maybe I’ll do better with budgeting if I get some online help in that area. I’ve reviewed a lot of different online tools. A lot of people like Mint. I’ve had mixed experiences with it. It’s ok for tracking where the money goes, as long as it works right. But I’ve had some trouble with it tracking some of my expenses multiple times. Tired of the disappointment, I moved on. A lot of people rave about You Need a Budget. I like the concept of this site, but rejected it because it requires an actual software installation on the computer. I want something more portable than that. I finally decided to try something called Mvelopes.
Mvelopes is the modern online version of the old tried-and-true envelope budgeting system. I watched my father use the envelope system throughout my childhood. On payday he would go to the bank and come home with cash. He would then sit at his desk and dole out that cash into its designated envelopes. When my mom needed to go to the grocery store, she took money from the Grocery envelope. When I needed new shoes, it was time to hit up the Clothing envelope. When the car needed fuel, we tapped into the Gas envelope. And if there wasn’t any money left in an envelope, we had to either make do without, or figure out what envelope we could afford to move money from.
The concept of envelope budgeting is really solid. You can’t spend cash that isn’t there. But the idea of working with actual cash is kind of antiquated. I don’t want to have to deposit cash into my checking account every time I need to pay a utility bill. But Mvelopes brings that concept into today’s age, where life works with plastic transactions and online bill paying. I have online envelopes, designated for my budget line items. I can move funds from one envelope to another. Every time I get paid, I fund my envelopes.
I’m hopeful that this budgeting tool is going to make a difference for me and help me pay down some debt. But we’ll see. I still like chocolate…
The beginning of the semester is a bit of a whirlwind. You need books and parking passes and ID cards and you’re trying to get settled into your apartment and read your assignments for your first classes. And on top of that you have to deal with money. Tuition bills to be paid. Student loans to be disbursed. Student aid living expense refunds to be budgeted. It can be a bit overwhelming.
Many students are receiving large student loan refunds at the start of the semester to fund their living expenses for the fall term. In order to make budgeting a bit easier, I encourage you to deposit this money into a savings account and regularly “pay yourself” by transferring a designated amount to a checking account. When that pay is gone…don’t let yourself access any more funds until the next scheduled “pay day.” This will help you better budget your money to last the whole semester and avoid a diet of pasta and ramen noodles during exams when you’ll be needing proper nourishment the most!
If you need help figuring out a spending plan that works for you, there are several helpful web sites you can refer to. Access Group offers a budget calculator designed specifically for graduate students. This Wall Street Journal article also provides helpful tips on how to develop a spending plan.
Challenge yourself. Do you see places that you can reduce expenses? Try it! You may be surprised at how frugality can become fun.