Keepin’ that Booty in Check

17 Feb

*ATTENTION: PIRATE PUNS AHOY!

Ever since my freshman year, I have attended countless budgeting and financial planning workshops. In these workshops, the facilitator would urge me to be more “money savvy” and track my doubloons. Well, long story short, I never did.

Just like too many students do, I would get my disbursement (I mean, I would find my treasure chest) at the beginning of the semester, spend it on what I wanted and needed, and hope that it would stretch until my next one. I worked of course, but as all my student workers out there know, student pay doesn’t buy ship. Mostly, I relied on that disbursement money to pay for my captain’s quarters, buy groceries, and hopefully entertain myself with a movie or shopping every once in a while. I’m guessing I’m not the only student out there who didn’t take budgeting very seriously.

But here’s a sneak peek to the ending of my cautionary tale – budgeting while you’re in college is super important, because *spoiler alert* you might find out you were missing out on ways you could have been saving money for years.

I spent my entire high school and undergraduate career thinking that, as long as I had money in my treasure vault and was not going into debt, I was really good at managing my money. Even when that didn’t happen and I’d need to borrow money from my older brother or my parents (or loot the nearest port) to pay for that last month’s rent before my next disbursement check came, that was okay because I’d pay that debt back in just a few weeks. Well, that’s not smartly managed money.

I’m getting ready to graduate this May, sailing off to new adventures, and that has finally made me think about how I’m spending my money. I realized that I need quite a bit of gold to put deposits on a new apartment ship and rent a moving truck dinghy when I move for graduate school. A few weeks ago, I decided to open up a savings account to separate my discretionary spending from my required expenses.

I calculated out my portion of rent until the end of my lease and added $200 a month for food expenses. When I asked my roommate first mate if $200 per month was enough for food, he laughed at me.

(I guess I should preface this with a bit of information about me…I don’t cook. My discretionary spending is usually spent going out to dinner, far more often than I go to the movies or do a little mall shopping. Also, I already mentioned that I never considered looking at how much I was spending each month, so I was blissfully unaware of my actual food spending.)

Anyway, he laughed at my $200 per month budget for food, and I was indignant. $200 is plenty! I probably just spend a little, tiny bit over that now, without trying to cut back to save money! And I set out to prove that my $200 per month would work for food. Starting from last November, I calculated each months’ food totals, including each meal and trip to the grocery store.

Aye, I was shocked.

So shocked that I am too embarrassed to admit the amount, but it blows my $200 per month food budget out of the water (with cannons). I saw how much money I spend on food, and I realized that if there’s one place I can cut my monthly budget significantly, it’s there. How much money could I have been saving this whole time if I had been paying more attention? I definitely wouldn’t have to be as stressed out as I am now about money.

It’s too late for me, but oh, you’re still young and you can get your sea legs in the treacherous waters of financial woes!

Now that you’ve heard my horror story (and really, it could have been muuuuch worse, but still, lesson learned…), you know how important it is to stay afloat of your finances, starting right now. After this horror story, I’m not going to cut you loose without some budgeting tips to help you out!

Understand Your Spending
Take a look at your bank statements for the past few months. How much are you spending on bills each month? How much on food? Entertainment? Peg legs? Shopping? Parrot food? World of Warcraft accounts? Netflix? Coffee every morning? Eye patches? Really take a look at how much you’re spending and on what.

Throughout your budgeting experience, you’ll want to keep a weather eye out on your spending. Luckily, in the digital age, it’s easy to keep it at your fingertips! A great (and free) budgeting buddy called Mint can be downloaded directly onto your smartphone treasure map. How’s that for convenience?

Make a Budget Captain’s Log
Now that you know how you usually spend your gold, draft up an ideal budget. You can download Excel templates, or stick with a trusty parchment and quill. The main thing is to understand where all of your income is coming from (include loans, scholarships, jobs, babysitting money, money from your parents, etc.). If you get a big check at the beginning of the year or semester (from loans or scholarships), try to divide that money by the number of months until you get your next one. For example, if you receive $2,400 in loan money at the beginning of the semester, and you know that you need that money to last at least 6 months until your next loan check, you should only spend $400 per month. That way, you’ll know how much you should spend from that pool each month without overspending.

Then, you’ll want to figure out your expenses. First track the things you need, so consider rent and bills. You also need food, but there are so many ways to spend various amounts of money on food. (Your roommate may be cool with eating bologna sandwiches breakfast, lunch, and dinner, but not everyone is!) This is where understanding your past spending habits comes in handy. Set your food budget based on a realistic figure you can live with. Next, set a discretionary spending limit. Again, you can break this up into any number of categories depending on how you typically spend.

Your budget is basically your stencil for how you should spend your money each month, so it definitely doesn’t help to do a budget and never look at it again. At the end of each month, use your bank statements to compare how you actually spent your money to how you wanted to. Make adjustments as needed (I know I definitely have had to!).

Use Cash
I requested a parley with me mother about me recent problems with budgeting, and the first suggestion she gave me was to use cash. Usually, a $1 charge here and a $3 charge there doesn’t seem like much in the moment, but by the time you get to the end of the week, that’s a pretty penny! Decide how much you would like to spend on oh, I don’t know… let’s say food. At the beginning of the week, I visit an ATM and take out that amount of money.

I won’t use my debit card to buy food, just my cash that I take out. That way, I know without a doubt that I’m staying within my weekly food budget. Right now, I only do this with restaurants and such, not my groceries, but it’s already been a huge help. You can do this with other expenses too. Maybe your weakness is shopping for clothes, or buying video games. Whatever it is, using cash will make you more aware of how your purchases are adding up and make sure you don’t overspend (at least without you knowing it!).

 Avast, before ye know it, ye be a seasoned sailor of the financial seas.

–Tori

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