Budget Basics

The summer I finished college, I quickly got a part-time job.  Don't misunderstand, though, this was not the kind of part-time job that helped me squeak by - the first few months, as I worked my way into more hours, I was making $300-400 a month.  Talk about being broke.

By the time the winter came, I was more in the realm of $600-800 - enough to keep my car rolling and make the minimum student loan payments when they kicked in while my parents covered everything else in my life.

The next spring, I got a promotion, and started making enough to put me above the poverty line.  I knew it was time to make a budget.

There are a million people and blogs out there that will tell you how to set a budget, and I did a lot of research before making my first budget.  Two years later, my budget has changed to reflect a growing income and changing student loan payments, but the main tenets have remained the same.  A budget is personal, so my budget theory is personal.  I believe a good budget should:

• Focus first on paying for necessities: rent, groceries, utilities, transportation
• Focus second on paying off debt.  NOT minimum payments, but aggressively paying it off.
• Be envelope-based.  This means that you intentionally set aside a certain amount to spend in each category (groceries, gas, clothes, enterntainment, etc) and when you run out of money in that category, you stop spending for the month.
• Think long-term.  If you're paying insurance every six months, calculate the monthly amount and include it in your budget so you aren't spending money you'll need soon.
• Reflect your priorities.  It's more important to me to build up a "romance fund" so I can see my long-distance guy than to buy new clothes, and the amounts I put in each category reflect that.
• Be zero-sum.  The total of your spending categories should equal your income.  Every dollar should go to a category, with no extra.  If you plan out each category and have extra, recalculate.  Give yourself a little breathing room in tight categories, add to your debt pay-down plan, or put the money in your savings every month.
• Hurt a little.  If your budget doesn't pinch a little and make you think twice about purchases, then it is probably not getting you toward your long-term goals (yes, you should have long-term financial goals).

If it's your first time making a budget, it can seem kind of impossible to figure out what categories to create and how much to put in them.  To help get started, I really like Dave Ramsey's Monthly Cash Flow Plan.  It lists more than 50 categories you should think about, and it offers "optimal" percentages to help you see what's reasonable or not.  Again, my percentages don't always line up because some categories are more important than others - I don't always agree with Dave Ramsey - but it helps me be more conscious of where I might be spending too much.

The 52 Week Challenge Ends

This weekend has been awesome for me motivationally, because Friday was the end of the 52 Week Challenge.  After a week of hyper-emotions related to realizing it has been a year since my college graduation, getting to take the money out of my challenge box was just what I needed to feel like I'm making headway.

The Challenge is easy to start, but can be hard to stick to for one simple reason - once you get about halfway through, the amount of money going in your box (and out of your budget) every month gets pretty high, especially if you're not making a whole lot of money to start with.  My celebration on Friday when I went to the bank, though, was so worth it.  Not only am I now set for my best friend's wedding, but I added to my vacation fund AND got to write a check for six months of my student loan payments.  It is the best feeling to knock out so much debt in one fell swoop.

An Anniversary of Sorts

In less than a week, it will be one year since my college graduation. There's a part of my brain that doesn't accept this at all, insisting that twelve months have gone by in this flash of what feels like so much... Nothing. 

It seems like everything has happened to everyone else. My best friend is legally married (although the military means her wedding isn't until this summer). My other closest friend is working for AmeriCorps (I highly recommend) and has helped almost all of her students test out of needing her help. My brother and his girlfriend welcomed a stunning baby girl (and don't get me started on all the other people in my life popping out babies). Friends who don't even graduate college for another week have already accepted once-in-a-lifetime, following-my-passion jobs. 

It's hard to feel like you haven't gotten it right yet. Growing up, I was that girl that made all the right choices. When the girls in my class were out getting drunk, trying drugs, and getting pregnant, I was at home reading, studying, practicing, being bigger and better. 

It doesn't feel like it. Being back in my hometown, my tiny country town, means watching all these people I know make bad choices and still, magically, end up with all of the things I want but can't seem to get my finger on. 

And you know what? It's okay. 

Television, newspapers, bloggers, and more are slowly beginning to talk about post-college depression and how the current "real world" situation is making the transition difficult for grads. Everything from money and jobs to relationships and parents can make us feel like we're failing. 

But a lot of this we do to ourselves. We convince ourselves that where we are in the growth process isn't good enough or far enough. We tell ourselves we aren't doing enough, being enough, that we (or others) should be ashamed of what our life is right now. 

There's no shame in not finding a dream job the day after graduation. There's no shame in living with others while we sort out our finances. There's no shame in working for minimum wage. If we get up, day after day, and try – try something, anything that will make us grow, move us forward, or help us step up – even if we aren't striving for the things we planned on at 18, then we are succeeding. If you get an interview but don't get the job, you are doing better than some. If you live on Ramen while paying your loans, you have it better than some.

We cannot measure our daily lives by the big goals. We have to learn to measure  success by the daily achievements that get us infinitesimally closer to the big goals. Learn something about yourself, about work, about motivation, about others every day, and you'll get there. You will. Even if "there" changes by the time you arrive. 

New Year, New Chances - Giving with Goals

New Year's Resolutions get such a bad rap.  I mean, you can't really blame them, with how quickly they fall by the wayside.  I personally don't like the word "resolution."  I prefer goals.

There are some secrets to the art of goal-making and goal-keeping.  When it comes to goal-making, keep in mind that it isn't just a year in broad terms.  What do you want to accomplish this week?  This month?  What about today?  A combination of short-term and long-term goals keeps you from becoming overwhelmed.  Don't just think about how you want your life to be different at this time next year, think about what you need to change now to improve your life and your attitude.

Goal-keeping.  It's cliche, but write them down, and put the list somewhere you will see it (posting it on a shelf in the linen closet isn't going to cut it).  If you have a love of Pinterest like I do, create a Vision Board and pin pictures that represent your goals.  Move the board to the top of your profile page, and you'll see it every time you look for a pin.  And if you do have some long-term goals, break them down into smaller chunks.  If you want to save $500 for a new gadget by the end of the year, remind yourself how much you have to save by the end of each month and you'll be more likely to succeed without pulling your hair out or living on Ramen from October on.

But don't just think about yourself.

This time of goals and renewals is the perfect time to move out of the self-absorbed shells we all seem to carry around these days.  Make a commitment to yourself to do something better, to give back for your blessings (and if you have a computer to read this, I know you are blessed).  Is there a charity that tugs at your heart?  Make a goal to give to them in some way, whether it is with money or your time or something else entirely.  Are there people in your life you could use friendship and support?  Set your heart on taking time out to bless them with your presence, digital or in-person (put an emphasis on in-person).

My 2014 Goal #1 is to donate blood more frequently.  Giving blood is so easy.  If you've never done it, I really suggest you try it at least once.  It's not as scary as you might think, and it doesn't take long at all.  It takes no money, and it saves lives.  It doesn't get much better than that.  Start here to find out more.

Give of yourself.  You'll feel better about yourself, and that we keep you on track with your goals.