Budgets are like pokémon. They are great tools to help us through our journey and reach our goals. This four-part series takes a look at my budgeting history and my journey to finding my current budget.
In part one, I look at how my budgeting developed and changed as I grew up over the decade before moving to New York City.
The first time I remember understanding the concept of personal finance was as a Schoolboy Trainer working on my Personal Management merit badge for the Boy Scouts. It taught me about budgeting, saving and how to purchase daily necessities and one time purchases. I learned about the envelope system and about tracking expenses in a book.
My budget education continued in a high school small business class when I had to write a proposed budget. I remember thinking it was so simple. Figure out how much things cost, place the number in the chart and don’t spend over that amount.
I enjoyed these lessons but found it difficult to put into practice. My $5 a week was difficult to power split into the different envelopes. I would mow the lawn and do chores around the house, but I didn’t have a real job until college. My expenses were occasionally going to the movies or buying pokémon games. If I wanted something and I had money to pay for it, I bought it. If I wanted something and didn’t have money to pay for it, I needed to save my money to pay for it.
I didn’t start making my own money, paying my own bill, and using my own money for gas until I was a Breeder Trainer in college. Once I had an income, I believe my budget switched to a "just don’t spend all of the money" style budget. I remember always having money in my savings account, but not necessarily putting money in it. I believe my only monthly bill was for my “emergency” credit card, which I am sure I was paying just the minimum for each month.
I remember the first time I saw my friend Skier Sarah’s budget the summer before our senior year. It was a grid telling her how much she could spend in each area of her life each month. My immediate thought was,” I should be doing this.” So I tried.
I mimicked what I thought I saw combined with what I remembered from my small business class. I made a list of my bill and estimated amounts of how much I thought I should spend on restaurants, groceries, and entertainment. I have no idea how I developed those numbers. I don’t remember if I accounted for my income or if I even put it into practice.
Skier Sarah watched her finances closely because she had a financial goal in mind and a plan to achieve it. Like when I was a Youngster Trainer beating the elite four with a half water based team, I didn’t quite know exactly what I was doing, but my copycat budget was still successful.
Then I moved on to grad school where I had a single monthly paycheck and more bills to pay. My budget sketched itself into a tool for making sure I had rationed that monthly paycheck appropriately. My bills gained electric, cell phone, cable, rent, car insurance and a loan for a summer class in Argentina and Peru in addition to my credit card bill. Along with those, I had variable expenses like gas, groceries, and laundry that I needed to pay more attention to.
I first began training my budget by tracking the money I spent by stapling every receipt into a notebook. But, I was only tracking where the receipts physically were. I didn’t review any of the data I was collecting. I was just disabling my Friday evenings with pointless paperwork that eventually led to procrastination and eventually stopping altogether.
Thankfully, my bank’s website added a budget guide. It used the information from my debit cards and credit card to track and categorize my purchases. It did what my receipt notebook failed to do and clearly showed me my spending habits.
Their budgeting tool also allowed me to set spending limits for each category and would notify me if and when I went over. I estimated limits using my new spending data for my first attempt. As I started to watch and learn about my spending habits I adjusted the categories until eventually, they became practical and attainable. It felt so fulfilling to have finally figured out a budget and be successful at using it.
During my final year of grad school, I taught my budget a new attack inspired by my grandmother, called “fun money.” At the beginning of each week, I put a $20 bill in my wallet to use for restaurants, entertainment or whatever else I wanted. The idea was to limit my excess spending by using the psychology of handing over cash. Once my fun money was gone, it was gone and I wasn’t supposed to find more for fun. Leftovers did roll over, though. I think fun money was my Pokémon-Amie by starting to develop a bond with my money.
By the time I was ready to move to New York City I felt like I had a pretty solid budgeting foundation. Four and half years after making the big move, I can see that my budget could have survived that first year. However, my budget eventually took too much damage and wasn’t able to evolve fast enough to counter what was to come.
In part two, I look at how my budget was challenged and eventually defeated by my first year in New York City.
To be continued…