Better Budget Challenge #1

From “Better Budget Challenge #1 — Our budgeting experiences“:

1. How have you used a budget in the past?

   I’ve tried budgeting with Excel spreadsheet templates when I was in college. Essentially, I would put in the amounts I felt I should spend per month so that my expenses would equal my income. It was a simple system.

2. How did you put your budget to work?

   I don’t think I put it to work at all. It mostly existed for me to be more conscious my spending, even if it didn’t change my spending habits. I would tweak the category amounts in the budget as I spent money on what I wanted to.

3. In what ways did your budget (or lack of) work for you?

   It did make me more conscious of my spending. That’s a good thing.

4. In what ways did it fail?

   Oh, boy. Since it became a source of guilt, it failed to motivate me to make a change. I couldn’t easily track how much I’d spent in a particular transaction — I had to add the amount of the new transaction to the old amount myself. It’s very helpful to me to be able to see that I can either spend $50 for two weeks of groceries or $10 for a single meal if I eat out.

5. Think about your past experiences with budgets and your home finances. How do you want to use a budget in your personal finances?

   I like updating my budget every time I make a purchase. It helps keep me aware. I also like the idea of spending guidelines, but I don’t think that’ll work for me. I first need to just know where my money is going. I like the idea I read at Paid Twice, that a budget that’s an arbitrary spending plan will very likely fail. For instance, most budgets separate dining out and groceries. I’m doing that this month, but so far, I find I think of money as for the category “food”. If I eat out, I tend to want to spend less on groceries to make up for it. So maybe next month, I’ll combine the categories.

6. What is your overall purpose in establishing a household budget?

   Well, right now I’m not meeting my savings goals or reducing my debt. Teachers make more than enough money (given that I’m single with no kids), so that doesn’t make a lick of sense. I need to find out where my money’s going in order to stop the hemorraging. I’ve got a lot of goals — from preparing to need to take care of my little sister to having a solid emergency fund. I’ve been working for 5 months now, and I’m only slightly closer to those goals than when I started.