Graduated Learning: Life after College

I got my degree, I got a job…now what?

My Personal Finance Confessions October 30, 2009

Filed under: Personal Finance — Stephanie @ 6:45 pm
Tags: , , ,

I have a confession to make.  I’m not a perfect person.  I know.  It’s hard to believe.

But seriously.  I know there are so many rules that you’re supposed to follow when it comes to personal finance.  And I think I do a pretty good job at following most of them.  I spend less than I earn.  I transfer money automatically to my savings account every month.  I contribute to my 401(k) up to the company match.  I fully fund my Roth IRA every year.

There’s one thing that I don’t really do.

I don’t budget.

There.  I’ve said it.

I was talking to a friend the other day, and she was lamenting how her mother was so impressed with her sister, because her sister budgets and has a vacation fund.  This friend was unemployed, but had been staying above water thanks to her savings that she’d built up.  She wanted recognition from her mother on this fact.  I commended her!  I’m very impressed by her high level of savings.  I assured her that, once she got back to work, she could start a vacation fund if that’s something that is important to her.  And that’s when my admission came out.  I told her that I don’t have a budget, either.

Why don’t I have a budget?

I don’t have a budget because it would be really boring and not very useful.  I have many consistent expenses every month (rent, utilities, car payment, student loans payment, etc.) which I know will happen each month.  Most of those costs are pretty non-negotiable, though I would consider paying more towards my loans to lower the principle.  The expenses I have every month that aren’t exactly the same each month are things like food (grocery store, lunches, dinners) and gas.  But in those cases, I have a total that I try to stay under.  I keep my grocery spending under $100 a month, and also keep my dining out to once a week, maximum, (and trade-off who pays with my boyfriend when we go out), and try to keep those expenses below $100 as well.  I’m trying to cut down on how much I spend at the cafeteria (i.e. trying to bring my lunch more often, buying cheaper options) but I try to keep my expenses in the cafeteria below $30 a week.  Yes, when you add up all this money over a year,  it’s quite a bit of money.  But I like going out to eat every once in a while.  And I need to have groceries.  I tend to spend less than any of the budgets.  But I don’t actually budget the money, i.e. figure out what money I have available to spend, then divide it between all of my expenses.  And I’m not really sure where I can lower any of my expenses (outside of the variable food), since I rarely go shopping.

So, am I making a big mistake by not budgeting?  I know where my money goes by tracking my expenses (after the fact) with Mint.  But I don’t plan things out.  I just inherently know my limits, and try to avoid spending money when possible.

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8 Responses to “My Personal Finance Confessions”

  1. Brian Says:

    It sounds like you are budgeting, you just don’t want to admit it. There is no hard and fast rule to budgets. It doesn’t need to be on paper, and it doesn’t need to be in excel for it to be a budget. Having a spending goal and coming in underneath that is pretty much the same thing as having a budget.

    Check out the personal finance hour from this past week to hear more about budgeting.

    The foresight of a budget written down is great, but really not necessary. Whats probably more important is what you do with the money that isn’t being spent on food, groceries, rent, etc. Maybe you need a Saving Budget and not a Spending Budget.

  2. SP Says:

    I like to budget and plan things in advance.

    But I think the most important part is knowing where your money is going, even if it is after the fact. You can still pinpoint if you WERE shopping a lot, or if you were unknowingly spending a ton a the grocery store, or whatever. And you basically have a mental budget: You try not to go over 100 in restaurants, or whatever. If your income exceeds your expenses by enough, worrying about it in advance is more of a preference than a requirement.

  3. I don’t really “budget” in the traditional sense either where i stick to something strict

    I call it hands off budgeting or flexible budgeting.

    I just list my fixed expenses, and then whatever I spend, I keep track of and just review at the end of the month

    I like being very flexible and unrestrained by a budget, telling me “you only have $20 to eat out this month”…

    If I go over up to $50, I just don’t buy what I wanted in the other categories, or I just let it go.

  4. Forest Says:

    I never really budgeted in the past. I kind of had the same method you do, but in September I got married and so we decided to try and set up a budget for October. It wasn’t a terrible experience and we only went over a little bit, but I’m not sure we are going to keep it up. It just seems like a big hassle for nothing when we know that we aren’t crazy spendaholics. Don’t worry, you are not alone without a budget!

  5. Risa Says:

    I did Budgeting ( flexible budgeting ) for my expenses and this really help me. I agree with brian.

  6. Hmmm… in my case, I have a unique way of budgeting my money. I don’t really lists all my expenses since I’m still single and doesn’t have dependents.

    What I do is I pay myself first when I received my salary so it goes out to savings immeditely. The rest would be left for expenses. If that amount dried up on my hands before it was replenished again on the next pay day, then that would put me into alarm and watch my expenses. Otherwise, if not, then I don’t care much where do I spend it as long as I maintain my monthly savings.

  7. What you’re describing sounds exactly like budgeting, so don’t worry about having the spreadsheets or anything. (I just really like spreadsheets, so making and tracking on is just fun for me. I am a huge nerd.)

    Sorry for the late response – trying to rejoin the land of the living & catching up on everyone!

  8. SS4BC Says:

    I think what you’re doing sounds like budgeting to me – at least, it is exactly how I budget. I simply have a spending account and that is where my money comes out of. Some people track every expense and every dollar, and I don’t care as long as I don’t go over in my spending account. =)


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