This time last year, my budget — which I look at constantly and update at least monthly to make sure it still makes sense — looked a lot different. I knew exactly how much money I was bringing in at my job, and at the time, I only had one job. I sometimes made “side-money” babysitting, and didn’t even factor it into the budget — it just went directly to savings. I was living with my parents rent-free, so my expenses were much less. I only had a few bills that I actually had to budget for, and the rest of my money was mine to put into whatever category of my budget I pleased. (I usually chose to put it in savings, because I’ve always been a saver — but sometimes it went to “entertainment” or other fun things, since I wasn’t really responsible for much during that time.)
Now, I have a lot more in the budget. There are various apartment expenses, food expenses, and dog expenses. There are loans that went into repayment, money that needs to be kept aside for taxes, and huge savings goals (i.e. a possible move in a few years, hopefully a house, maybe someday a wedding, possibly a vacation).
I also now live with a partner, which means figuring out how we will share and split expenses. We haven’t merged our finances — we split our living expenses, and budget our personal expenses separately. However, we are saving for shared goals, so we feel a little nosy and entitled to knowing what the other does with their money. So my budget is still mine, but it is definitely different.
Because of these changes, I’ve had to go back to budgeting basics. I needed to create a new one that worked with my new lifestyle and actually allowed me to pay all my new bills, accomplish all my new savings goals, and somehow enjoy life in between.
Here are the four most important things I remind myself every time I create and re-work my budget to ensure that it is effective, and one that I will ultimately truly stick to.
1. It is yours.
When I made my first budget, I did a lot of Googling. And this isn’t to say that Google isn’t a good place to start — finding some sort of template or sample budget is great, especially if you’re just starting out in your Adult Life and aren’t quite sure what you should be spending on groceries, or how much you should budget for entertainment, or what amount you should put in savings each month. But after taking a peek at how others are doing it, you need to make it your own. Budgets need to be highly personalized for them to actually be effective. You need to consider all of your income — side-hustles, part-time work, even small babysitting gigs — and make your budget based off of what you earn. Chances are, your grocery budget as a single person with a $36,000 salary will be a little different than a family of three with a net income of $100,000. And chances are, the sample budgets you are finding via Google were created for someone with a totally different income than yours.
You also need to make sure your budget aligns with your personal goals. Some people toss $50 a month into savings, while some put away half their paycheck — it’s all dependent on your income, your necessary expenses, and what specific goals you are saving for. I saw a sample budget telling me to put $600 into savings per month during a time in my life when that would have been impossible. I’ve also seen sample budgets that didn’t account for savings at all, which is, in my opinion, totally unacceptable.
At the end of the day, you need to make sure your budget is tailor-made for your life and your needs, or else you’ll find yourself living by money-guidelines that make your life more stressful (which is the opposite intention of a budget).
2. It is fluid.
Even if your income doesn’t fluctuate (although it probably does, because you have a side-hustle, right?), your expenses definitely do. You can’t expect each month of absolutely-necessary expenses to be the same as the last, or the next. You will get new jobs with different salaries, move to places with different rents or mortgage payments, and have new recurring expenses come up. When these things do happen, you need to change your budget so it can make sense with the new parts of your life. One month your utility bill might spike, and the next month, it might dip. You may have an emergency medical or dental bill, or your dumb-af dog might eat a rock and need to be taken to the emergency vet that costs a thousand dollars per visit.
Obviously, it is hard to budget for emergency expenses (which is why you have an emergency fund, right?), but in general, it is a good idea to create next month’s budget with last month’s budget in mind. If you had to cut corners in certain areas last month because of an unexpected expense, you might need to give a little extra money to that slice of your budget this month (especially if the slice of your budget that suffered from the emergency expense was something like a loan payment or credit card debt).
If you are like me and have an income that varies quite a bit from month to month, you probably need to customize your budget each month depending on what your income was last month. It is important to remember that your budget is living and breathing just as you are, and needs to change when your circumstances change.
3. It applies even on fun days.
Creating the budget is one thing (and it is a huge step, so bravo if you’ve at least created one!) but sticking to it is a whole different thing. Once you’ve put in the time and effort to create a budget that makes sense for your life, you need to really make it a part of your life. That means that even when you’re out, and your budget only allows for you to spend $20 more on drinks and entertainment for the month, but you’re really wanting to order three more drinks follow up with greasy diner food, you might just need to put the YOLO mentality aside and go home. Most fun days and nights out don’t call for an actual change to your budget, no matter how much you want another drink or how much of a good time you’re having.
4. You reserve the right to change it, but don’t abuse that power.
It is yours, and per #1, you reserve to right to change and alter your budget as you please to (and as you need to). However, don’t get too drunk on that power, or it’ll lead you to make the #2 mistake of being impulsively lax on your budget depending on how much fun you’re having, and ultimately not actually sticking to it. If you know in advance that there is a special event that will put you over budget one month, or a once-in-a-lifetime opportunity comes up that will cost you more than you anticipated spending in a certain area, you can alter the budget as you wish to make room for it.
You do still have to live and enjoy life, and your budget can’t be the thing that dictates every single part of your existence. But in order for this to make sense, you need to find some balance. Change your budget when you really want to and really need to, but don’t make a habit of it — don’t make decisions on a whim and make everything you want into an excuse to throw your budget out the window. At the end of the day, the only way for a budget to actually do anything for you is if you make it work for you, and then live by it.
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