ROTTERDAM – To be honest, I don’t really fancy this one. I guess being financially responsible is being part of the being an independent man and whatnot.
With the economy in the tank, it’s more important than ever to tighten our belts and get our finances under control. The most effective tool to do this is the lowly budget. I’ve had an on again, off again thing with budgets. But when I’ve used them, my financial situation always improved.
Of course, what ends up happening is that I get lazy, stop making time to review my budget, and fall back into just sort of winging it with my finances. While I don’t start spending like a high roller, I’ve noticed that when I’m not following a budget, my financial situation stagnates and doesn’t improve. And as men, especially as men taking this 30 Day challenge, we’re all about continual improvement. So today we’ll be creating a budget. Let’s go.
Okay. Makes sense. I have always wondered why stuff like this never gets taught in high school. The number of people who are working up enormous debts is ridiculous, and in this consumerist society we are prone to live way above our budget anyways. There are examples in the U.S. of financial practices that are even more ridiculous and put people in insane debts they will likely not get of, ever.
Besides my student loans, I haven’t gotten any financial schemes running, really. But if you think about it, the fact that most people have a mortgage basically means that you will spend the rest of your life paying money back (plus interest) to some bank. Imagine how much money that is. That’s like calculating how much you spend on wine or cigarettes or clothes on an annual basis and then realising that you’re spending WAY too much.
The Benefits of Having a Budget
I am growing a bit #$^%&! tired of being treated like I am a complete idiot. I know what the benefits of having a budget are. Financial responsibility, yada yada. I will summarise it for you, then:
Puts you in control. A man is always in control. He’s in charge. But when you don’t have a budget, your money controls you, instead of the other way around. You want to be the man with a plan, not the man floating along with his head in the clouds.
Actually, I’ll leave this one in, because this exemplifies much of the Art of Manliness and the 30 Days To Be A Better Man challenge. A man is always in control. He’s also in charge. In this case, he’s in charge of his own decisions. He’s got his shit figured out. Independency is worth striving for, – I agree.
I am, however, not naive enough to disregard the influence other people have on my decision-making. The Art of Manliness seems to think that being a man means that you are in charge of your entire life. Every decision you make, you make because you want to.
This glorification of individual choice (and by extent responsibility) completely disregards the fact that we are often not quite as deliberate in our decision-making as we’d like to think. Our upbringing and socialisation processes, the normative frameworks and culture we find ourselves in, the specific situation and the other people involved in this situation all shape the way we make our decisions. Maybe you are not even aware of those influences, so ask yourself: are we really in charge of our decisions?
Are we really men with a plan?
Ah, also, having a budget:
Nonetheless, having an idea how much money you have and what your cash flow is, isn’t the worst idea in the world. It’s just that mine is exceedingly simple at the moment. If you are interested in making a budget, below Brett & Kate will describe how to go about it.
1) Assess your monthly income. Gather your pay stubs together and figure out exactly how much you’re bringing in each month. If you’re self-employed or do work on the side, make a close estimate of how much you earn a month.
2) List your fixed expenses. Fixed expenses are those that stay about the same each month. There’s usually not much you can do to change the amount you pay on fixed expenses. Fixed expenses can include things like rent or mortgage payments, car insurance, car payments, and health insurance.
3) Subtract your total fixed expenses from your total monthly income. The amount that’s left over is what you can work with for your variable expenses.
4) Set a spending goal for variable expenses. Now that you know how much money you have to work with, you can start budgeting for your variable expenses. Variable expenses are those that fluctuate from month-to-month. You have a degree of control over variable expenses. These are the areas where you can cut back the most and start getting ahead in your finances. Variable expenses include items like groceries, gasoline, eating out, and entertainment. Set a reasonable spending goal for each variable expense.
The two most important variable expenses, and the ones that you should budget for before you budget any others, are a retirement and emergency fund. Let’s face it, when it comes to retirement, we can no longer depend on our jobs or the government to fund it. So it’s up to us to do it.
In addition to saving for retirement, budget some money each month for an emergency fund. This money is to be used only in, well, emergencies, like unexpected unemployment or car repairs. Even if you can only sock away $25 a month in the beginning, it’s better than nothing.
4) Subtract your total expenses (fixed and variable) from your monthly income. The goal is for your expenses to be less than your income. If they’re not, you’ll need to tweak it some so that they are. This may mean cutting back or cutting out things like going out to eat or cable television. If you have any surplus, put it into your emergency fund or towards your retirement.
5) Keep track of spending. After you’ve created the budget for the month, keep track of every single penny you spend to ensure that you stay within your budget. Keeping track of your spending will also come in handy when you make next month’s budget. You’ll be able to review how much you spent the previous month and adjust your budget accordingly.
6) Review your budget every month. Each month, go over last month’s budget to see how you did. You’ll be able to see where you did well and where you can improve. After you review, repeat the whole process and make next month’s budget.
Man-meter: now that I took a hard look at my finances I feel poorer and definitely not manly.