What does it mean to "respect the budget"? Ultimately, it means spending within your income, but there are a myriad of temptations to distract you from doing such. According to a recent Money magazine article, for every additional hour of TV watching (per week) you do, your spending is boosted by $200 a year. Why? The article posits that we are no longer keeping up with the Joneses, we're keeping up with the Kardashians. Not to mention the countless other messages we get, subliminal and otherwise, that encourage us to part with our dough. We've heard of them all: how shopping carts are engineered to be larger in an effort to get you to fill it with more junk, how buy one get one free "deals" are sometimes misleading, or that the notion of buying in bulk is good (which we know not to be true in all cases; do the math and look at the per unit costs!). Nevertheless, we have to fight these demons of "spend, spend, spend."Although the circumstances are unfortunate -I'm no fan of massive layoffs, individuals losing a ton of money in their retirement savings, not to mention, an overall wariness of the banking system- but, this recession has forced many of us to think twice about how we spend our money. Folks are reintroducing themselves to the concepts of spending plans, coupons, and plain ol' doing without.
There are, however, a number of people who are not. Case in point: I went to the mall to help my girlfriend shop for a dress for an upcoming wedding. We spent a considerable amount of time looking for parking (and I doubt that all of those parking spots were occupied by people who worked at the mall); at any rate, I asked aloud, "what recession?" By the looks of it, folks were happy-go-lucky shopping. Now, there may have been folks in there simply window shopping, or getting their walk-around-the-mall-exercise on, however, my eyes did not deceive me. There were bags from Nordstrom's, the Children's Place, and some sneaker outfit. Folks were spending money!
I wish I had such luck. I physically handed over my credit cards to my girlfriend so as to not be tempted to purchase anything. I simply cannot afford it at the time. I did manage to spend $4.12 on a nutty cinnabon (totally not in the budget). In retrospect, I chalk it up to the fact that this was a peer pressure induced purchase. My friend got one, and the thought of a warm, gooey, 1500-calories sweet treat of my own was unbearable. I just had to have one!!! Besides, I hadn't had one since forever ago! My brief rationalization cost me a couple of bucks and worked against any notion of a diet I might have had. You might be thinking, "yeah, but $4.12 isn't bad!" That's not the point. The point is I failed to respect the budget. This expense was not accounted for in my financial plan for the month- this plan, of course, being geared towards me achieving my goals for saving and eliminating debt. So, I take a hit, there's an opportunity cost (that $4.12 could be a part of some larger sum of money doing something more productive.)
So I say again, respect the budget. I warn you, however, that it is no easy feat. In the same weekend that I succumbed to an overpriced treat, I managed to say "no" to eating out for breakfast and offered to cook at my house instead. I already had the ingredients and I saved my friends some money as well. I also declined to go out to the movies, after which my proposal for a rented movie at my house was defeated. Respecting the budget means saying no in anticipation of greater things, or at the very least, finding a less costly alternative. Those anticipated things may be as simple as maintaining your bank balance so that you can pay all of your recurring expenses without going overboard. Those anticipated things may mean having enough money to reach your savings goals or to pay off a debt.Whatever your financial intentions, I encourage you to respect the budget. Take control of the way you spend money and do so with an awareness of your [financial] big picture.
Submitted by Shani Gibson
Financial Empowerment Curriculum Coordinator
YWCA Delaware
Sources:
Fried,C., Futrelle, D., et. al. "Eleven ways to improve your financial self now" Money Magazine, June 2009.
I try to respect my budget and do a pretty good job but it is all of the little unexpected expenses like birthday presents and other odds and ends that I don't plan for. How can I plan better for the little things?
ReplyDeleteCreating a budget has helped me know the exact state of my personal finances, and being in control of this, has allowed me to take advantage of opportunities that I might otherwise miss. I know longer wonder walk around the mall wondering if I can afford something? I know!!!! Thanks for the awesome article.
ReplyDeleteShani’s Two Cents:
ReplyDeleteSet aside “play” money. If you factor this into your budget, it’ll be there to cover those often forgettable expenses like birthday and anniversary gifts.
Another idea, recommended by a Money magazine contributing writer, is to set up three bank accounts: two checking and one savings. If you enroll in direct deposit, have your pay directly deposited into one of the checking accounts (your “main” checking account) and the savings account. The amount automatically saved is not to be spent (it is intended for your goals and emergencies).
To make this work, take a look at your recurring expenses for the past three to six months to get an idea of how much money you spend, on average, for bills such as rent/mortgage, utilities, cable, phone, etc. The total of your monthly bills (on average) will remain in the “main” checking account. Feel free to cushion it with a few extra bucks for those variable expenses (such as utilities). What’s left over goes into the second checking account which you can use to spend on food, clothes, and gifts. If you run out of money, postpone when you give the gift and opt for a card in the interim. Looking ahead, you can consider less expensive options for expressing your gratitude, such as making homemade baked goods or quality time at a park.
Budgeting is not easy when we’re not used to it. It takes patience and practice, but once we’re in the habit of making financial decisions in a way that will help us achieve our goals and secure economic stability, we will be better off for it.
Best of luck!