budgeting for beginners
NOTE: This isn’t going to be a “how to budget” tutorial in case anybody stumbles across this entry in search of budgeting help. I’m just going to go over my own finances, so don’t yell at me if you try to follow my percentages and don’t get anywhere.
First and foremost, I am in a lot of debt. College is not cheap. My student debt is a little over 300% greater than the national average. I am also carrying around a bit of a credit card debt, but it is not outrageous by any means and I am not concerned with my ability to pay it off.
I am paid weekly, so making a budgeting spreadsheet was a little tricky for me. I had to divide monthly bills into the number of weeks per month, and I was sure to color code each balance because I will be adding money toward the bill every week until I take the lump sum at the end of month. Formatting in excel was a pain, but maybe that was because I wasn’t sure of exactly what I wanted before I started. I’m positive that I will have to work out a few formatting kinks as I go along, but I am pretty proud of the layout and colors I ended up with. That hardest part will be keeping up with this thing. Good thing I made it really pretty – it motivates me to use it!
The most surprising part of this whole process was seeing how much money I really have at my disposal. The last 4 years have gotten me adjusted to never having money. I was unfortunate in that whenever I did have money, it all went away very quickly because some kind of bill was about to pry it away from my cold, dead hands. Being broke constantly had its perks – I became very good at spending minimal amounts of money on unncessary things and I am also exceptional at finding awesome sales at the mall.
Now that I am making the “big bucks”, I have more money to play around with than I know what to do with. For the month of December, I have budgeted over $300 a week toward my “financial obligations” (student debt, credit cards, savings, retirement) because I have no idea what else to do with the $150 that was left when I got done making up the budget. Don’t get me wrong – this is great! – but I just never thought I’d be putting so much money toward debts because I didn’t know where else to put it.
So here’s an approximate breakdown of where I plan on putting all of my dolla’s once December rolls around:
Home (rent, parking fee, electricity) – 17%
Transportation (gas, maintenance, insurance) – 7%
Pet (food, vet, toys, etc) – 2.5%
Entertainment (movies, dinner, etc) – 5%
Health (gym, medicines) – 1.5%
Financial Obligations (debts) – 42%
Daily Living (groceries, clothes, hobbies, etc) – 9%
Vacation (this will go down significantly after my commencement) – 10%
Miscellaneous (Christmas, birthdays, etc) – 6%
I feel like I have left something significant out, but I will figure it out as I go along. In a few weeks, after I get a better idea of what I am spending on a weekly basis, I will be revising this, but I think this is a good starting point.
My biggest challenge is going to be sticking to the budget I have created. Self control has never been one of my strong points, and I would really like to figure out the best way to keep myself in line. Giving myself some money each month to “splurge” is a tactic I am considering, but doesn’t that defeat the purpose of making a budget in the first place?
As I said, this budget is going to be revised in a few weeks. In the meantime, if anyone has any tips on how to better fine tune this thing, pleast let me know. And I am ESPECIALLY interested in tips on how to stick with it!
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Life at Twenty-Two 
November 17, 2009 at 7:53 am
Good post.
If you don’t mind my asking, how many years until you are free of college debt?
You also just put it in to perspective how little it is I actually make. Your loan payment amount is approximately my take home pay.
November 17, 2009 at 11:31 am
Well, I don’t have the spreadsheet in front of me sinec I am at work, but the way I have it split up, it should take me about 4 months to pay off my credit card bill (assuming I don’t get too crazy with my black friday shopping) and probably about 10 years to pay off the student debt.
I made a lot of assumptions as I just calculated that (like I will continuously have a job), but I hadn’t done the calculation before since it seems like debt freedom is so far away and I didn’t want to depress myself. I’m actually kind of excited now!
November 18, 2009 at 11:21 am
Very nice work! I wish I had been as proactive as you seem to be, but it took me a bit longer to figure budgeting out. I have two tricks/tips to share that worked well for me:
The first trick I used, especially when I was just starting out with my first “real” jobs, was to use cash for things. This may have been easier since at that time I was paid monthly – I received my check, paid ALL the bills at once, and split off my respective Fun, Groceries, and Gifties into three envelopes full of cash. The deal was that, once spent, that was it. I could blow my entire grocery budget at the fancy gourmet supermarket and even dip into my fun money to make up the difference, but once that cash was spent, I just had to wait until the next month.
The second trick was to gauge how much I “really” needed xyz thing, based on the price. If something cost less than $20, and I saw it in the store, typically I would allow myself to buy it right away if I wanted it and had the money. If it cost $20-$50, I waited one full week to decide–I made a note in the calendar to check in with myself after the week, and if I still wanted the item and still had the cash, I’d buy it. $50-$75 I had to wait two weeks. More than $100, I waited one month, and more than $200 I had to wait two months. This system worked brilliantly, and I found that – more times than not – at the end of the week/month/etc. of waiting – I discovered I really didn’t want the item anymore. And if I DID still want it, I’d thought the decision through very well by that time.
Anyway, sorry for the super long comment – hope this helps! 🙂
November 25, 2009 at 11:21 pm
Good job, Heath. I have to do the same thing with my money – especially since losing subway. You’re gonna do fine with it.
as for setting some to splurge (finally, someone else that uses that word), you have to. It does not have to be a decent amount whatsoever…enough for one new shirt…one extra night out with friends/dan…whatever. Never giving yourself funds for funsies is always a bad idea. because when you DO decide to, it will be much larger than expected/warranted. 10-20/week….30-40 p[er check…whatever. Something small, so that if you want something pricey, yo have to wait so many pay periods to get it. who knows…by the time you have enough for it, you may realize you dont want it, and you then have that much more funsies left for the next month.
December 11, 2009 at 5:42 am
Interestin expose. I found myself in a debt crisis paid to living beyond my means a few years ago and managed to get of out it through the use of a liability consolidation specialist. They were highly valuable and helped me to place all my obligations into one loan which I could afford to pay back. This meant I became money owing free in specifically under 5 years. It was a brilliant feeling.