Welcome to the first post in a series where we'll be following one of our team members here at The Dime as she takes a hard look at her spending habits—acknowledging, at times, some truths about herself that might be difficult to swallow. The silver lining: she (and we) will pick up some personal strategies along the way to help lay the groundwork for money management success.
So you think you want to budget? I think I do, too. Over the next few months, I’ll be chronicling my foray into the magical world of personal money management. Hopefully we can learn a few things together.
But first, a little background.
I was privileged enough to grow up in a household where money was very tight. Privileged to be poor? That might sound strange, but I fully believe that it was imperative in shaping my attitude toward money. The older I get, the more grateful I am for that experience because it taught me so much about how to spend wisely, where to cut corners, and how to have fun without money. There has never been a point in my life where I did not live paycheck to paycheck.
One of the most important and helpful financial actions I took when I was really struggling was to do my version of the envelope system. There are lots of resources on envelope budgeting, but basically it boils down to allocating your funds into different categories to ensure that you can always, at the very least, pay your bills. My bank allows me to set up unlimited free sub-accounts, so I created all my “envelopes” using those. All of my funds funnel into the various accounts automatically without me having to think about it, and then automatic bill pay pulls funds at the appropriate time. Essentially, I made my bank my robot; I never had to think about anything! Because I wasn’t making much, it really helped mitigate any worries I had about whether I’d be able to make ends meet on a monthly basis.
In mid-2016, I started a new job. I went from the nonprofit world where I was paid poverty-level wages to a different world where suddenly I had more money than I had ever had before (though still in the lower-middleclass category). Going into it, I thought I was RICH! I thought saving would be a CINCH! I thought I would never have to worry about stretching my dollars ever again! WRONG.
The first lesson I learned is that no matter how much (or little) you make, if you don’t plan, you will spend it. That’s not to say that all spending is necessarily problematic, but there comes a point where you know you’re making more money, yet you’re still living paycheck to paycheck. After a few months in my new position, I realized that while I was still paying bills on time and meeting my responsibilities, I somehow had ZILCH left at the end of the month. Why? Why was this happening? Well, it all comes down to planning.
I still use my bank robot system—I’ll probably never stop because it’s so easy, and it eliminates a lot of financial-related stress from my life. The big change now, though, is that instead of saving excess funds, I’ve just been spending them like a banshee. A change needs to happen, so I’ve decided to take deliberate steps toward budgeting. I hope you’ll follow along with me as I figure out how to be a more financially-responsible adult (#adulting). Coming next month: an analysis of my June spending (let’s just say I’ve figured out that I have some major habits to curtail...)