Prompt: 5 Tips for Budgeting

Write about your approach to budgeting.

I don’t handle the finances in our household, although I would like to get a grip on them so that I could apply the budgeting tactics and strategies that have served me very well in the past.

Here are some basic rules:

1. You can’t spend money you don’t have. If you have to save, you have to save. If you have to go without, you have to go without. Credit is a trap. You can use the card for convenience or tracking purposes, but treat that credit card as if it were a debit card.
2. Everything you buy is trading your life away for whatever it is, so maybe you should have that cooling-off period of saving up to make sure it’s really worth the hours you had to work to get that money. Don’t waste your life on stuff that you’ll stuff into a drawer and forget.
3. Everything you buy is a trade-off. When you spend money, it is gone and you have the thing you purchased instead, which removes the possibility of spending that money on something else that you need or just want more. Consider that opportunity cost before the money is gone.
4. Round prices up, never down. You’ll never be sad to find out things cost less than you expected or that you have a little left over after your estimates for budgeting.
5. Look for extra fees and hidden costs before you agree to start paying for anything.

If you’re already in the hole, STOP DIGGING. Do not buy a single thing you don’t need to keep yourself alive until you pay for the things you already have.

All those financial guides that suggest making more money as a solution to debt are out of touch with the reality many people are living in. I have been working very hard recently to set myself to get my feet on a climbable career ladder, but up until now, I’ve been working a lot of dead-end and short-term jobs to have any kind of income in our house. And it is really easy to get stuck in a desperate situation where you’re not really making enough money, but you’re also not finding anything better. It’s often easier to cut your budget to the bone and perhaps have to deal with some discomfort along the way than it is to fatten up your paychecks.

I am not saying that you shouldn’t try to make more money. You absolutely should. But giving that as a solution ignores that some people will have a hard time making any significant moves, due to age, disability, or lack of being in the right place at the right time with the right skills.

Nonetheless, I’ve done very well, even in poverty, with the rules I listed above (and maybe a few others my brain skipped over). Even at rock bottom, I was proud of how well I made things work.

These are just my thoughts and things that have worked for me, inspired at least in part by Your Money or Your Life by Vicki Robin and Joe Dominguez, which I know I have mentioned before. (Disclosure: That’s an affiliate link. I might make a small commission at no expense to you if you use it to buy the book.) The method laid out in the book can be life-changing if you commit to the process. It’s kind of like diet and exercise in that regard, and just about as much fun too, unless you’re a real spreadsheet nerd. If you are, then this will be tons of fun.

Or you can get the book from your local library if you want to be smarter with your money.