Friday, March 28, 2008

The evolution of a budget

For the first five years of my adult life I worked for tips. Which meant three things:

  • I got paid daily
  • I got paid in cash
  • I never knew how much I was going to make.

Having a budget was entirely necessary. It’s pretty easy to overspend when your pockets are lined with cash after each shift. I got into the habit of writing down my days tips on the calendar each day when I got home from work. At least that way knew how much I was making. I also took $6 out of my tips each day and put it into savings. After that, I really made use of the envelope system. Although I didn’t know there was a name for it at the time. I did get a small weekly paycheck. I would save those up each month and deposit them all at once. It was enough to pay my rent.

At age 23 I got a new job and was no longer working for tips. Getting paid every other week by check was new to me. So, I needed a new kind of budget. I listed my expenses in a word document and allotted my income accordingly. I stuck to my original plan of holding my paychecks until the end of the month. At the end of the month, when I knew exactly how much I had made, I would fill in the upcoming month’s budget. When a bill was paid I would put the payment info into the budget. If it was a fund rather than a set amount, such as discretionary income, I used receipts to keep track of my spending and at the end of the day I would make a note of how much I had left in that category.

Then I met my husband. He upgraded my clunky word document into a nice organized Excel spreadsheet. This is the way to go. The budget is still basically the same. We sit down together each month and plan the budget for the upcoming month. We keep our receipts and use them to track our spending. We’ve recently started using Bruce the tax guy’s suggestion of organizing your receipts in envelopes for tax purposes. It works out nicely. My favorite part of our budget is that we both have our input. We each know exactly what our goals are and where our money is going. To me, just that alone is worth the effort it takes to have, and stick to, a budget.

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