Adulting 101: Budgeting

Wednesday, September 26, 2018, by Kashay Webb

I realized as I grew older that financial management is one of those things that is not explicitly taught to most young adults. Be that as it may, the way you manage your money can either cause you a lot of stress or bring peace to your life.

There was a time when I thought of budgeting as being synonymous with restrictions. In a way it is, but restrictions are not always a bad thing like I used to think. I like having shelter, food, transportation and clothing. This requires me to budget in a way that allows me to have those things. I also like buying Starbucks coffee, wine, books, traveling, and going out with my friends often. This means that I really have to budget for those things to ensure that I can have them.

Now, this post is not for those who do not care to budget or if you have tried budgeting and you believe that it does not work for you. I'd like to believe that budgeting can work for everyone with some modifications, no matter if you have $1.00 or $1 million dollars or if you have steady income or inconsistent income. It's not the amount of money or the budget that really matters, but the skill of management.

A budget can be as strict or loose as you want it to be. Simply put, a budget is a projection of money that will come in and money that will go out during a certain period of time. I like to use a site called Every Dollar to create my budget (screenshot below). This website allows you to enter your estimated income for each month as well as expenses including housing, transportation, savings, lifestyle, etc. It is called Every Dollar because of the philosophy shared by its creator (Dave Ramsey) that in your budget you should be telling every dollar where to go. His point is that instead of letting your money just slip away from you, being intentional should be a priority. 

I like this website for a few reasons. First, it's free. There's a premium version that you can pay for monthly. It allows you to track your transactions easily by linking the site to your bank account. I have personally never used this version because you can track your transactions manually at no cost and I do not mind doing that. I actually like it because I can take the time to review and analyze each of my transactions.

The second reason is because I used to write my budgets in a notebook, but I found that having everything electronically allows me to not have to carry a book and the calculations I would usually do are done for me through this tool. I found my budgets to be a lot more accurate and quicker to set up and review because of this tool.

The third reason I like Every Dollar is if you are following Dave Ramsey's "Seven Baby Steps to Financial Freedom", you can easily track each step through this site. Or even if you are not following those steps, you can create funds and track the progress. For example, I created a fund called "Graduate School Applications" to track my progress in saving for fees associated with applying for graduate school. 

A budget can take on whatever form you want it to, but an effective budget is realistic and requires a certain level of honestly about yourself. I know that I like to do random things like take spontaneous trips to Ikea and Target or spend my free time going to new places. Because I am honest about my random behavior, I build in a certain amount each month for me to do these things and not feel bad about it. Other people use budgets to restrict this behavior by not allotting money for those types of things and once the money is gone in a certain area, it's gone -- no ifs ands or buts. Being honest with yourself is key for this to work.

I hope this post inspires you to at least try to keep a budget. I think the discipline of keeping one actually rubs off on other aspects of your life and helps you reach financial goals faster. If you are intentional, honest, and consistent, I'm sure you will get something out of it.