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how to adult
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This month we're focusing on topics to take into the New Year. Developing a budget that works for your life will help you master life. Below i've listed my advice for developing a budget for your flexible income. I also recommend our article on saving. I'm happy to answer any questions the comments section or via the contact link!
Step 1: Where do you want your money to go?
For most of my life budgets have always made me feel restricted and sad. I realized about a year ago that it was because I was setting IMPOSSIBLE budgets. I would give myself a food budget of $10/day because I knew someone else who lived on that budget. I didn’t take into account that food is the thing I WANT to spend the most money on (soap box: what goes in your body is way more important than what goes on your body). Similarly, there are areas of my life that I skimp on that are a priority for other people. So step 1 - where do you want your money to go? This is easy to do in percentages - for example, 15% savings, 10% transportation, 15% food, 30% housing* , 30% student loans.
*Unless you’re looking for a new place to live, housing is a set expense. For simplicity sake, I take all fixed incomes (rent, utilities, savings, student loan payments, car payments) out of my income first then develop a budget for my more flexible expenses.
Step 2: Where does your money actually go?
This is the most boring thing in the world - initially. You need to track your spending for 6-8 weeks and actually LOOK at where your priorities are. Do the priorities on the page match the priorities of your heart? When I see I’ve spent $40 on Starbucks, that’s not okay because going to Starbucks doesn’t bring me any more joy than brewing Starbucks coffee at home. When I see I spent $40 on gas to see my boyfriend, I'm okay with that. 6-8 weeks is a good time frame because it allows you to factor in purchases that you don’t make everyday - like nail salons, hair cuts, and gifts.
Step 3: Align your lists from step 1 and step 2.
It’s a lot easier to cut out purchases when you have an idea of where that money will go instead. This step allows you to physically see that the $40 spent on coffee = a trip to Atlanta to spend time with the person you love most in the world. I would wake up three minutes earlier to make coffee for that (or invest in a coffee pot with a timer!)
Once you successfully go through these steps once, budgeting will become a lot more fun because you will have increased your joy per dollar spent.
You can of course track these numbers by hand or with your credit card balance sheet. I use mint because it’s incredibly well organized and visually tracts your monthly budgets. I open the app multiple times a day because it’s super quick. Level is also a great app that tells you how much money you can afford to spend each day to stay within your goals. This is a great app to keep your daily purchases from adding up.
Keep in mind that your budget shouldn't be static each month.
It will change based off of vacation plans, need for winter clothing, holiday gifts, significant other birthdays, etc. Don't feel like you're cheating if you bump your budget up one month to cover one of these.
Just be mindful of what you're doing and stay within the limit you've decided you can afford!
I'd love to hear what budgeting tips work for you!
Happy to answer any questions in the comments section.
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