» October 29, 2015

Daily Archives: October 29, 2015


Intro to Budgeting with Paper & Tech / Getting Your Financial S*** Together 101

Published by:

Before I started using a planner, I basically just spent whatever money I earned as I earned it, and saved 0% of my income. This is called “living paycheck to paycheck,” and according to different sources, somewhere between half & three-fourths of Americans have this short-sighted relationship with their money.

What tends to snap you out of this cycle is realizing that you’ve worked X number of years (or decades!) and have no savings to show for it. You made all that money, and you spent all that money. Now you want to go on a trip or buy something important or some emergency expense comes up & you can’t afford it. But what if you had saved just 10-20$ every week since you started working? That’s around 500-1000$ per year. Multiply that by the years you’ve worked…and that’s what you *would* have in savings if you had taken better care of things along the way. How awesome would it be right now if you had that amount of money saved?

Getting your act together financially is easier than you may think. With a little effort, you can make huge progress!

Below, I’ll cover the basics: budgeting, finance tracking, and a bit of mentality shifting.

Part One: Budgeting

A colorful budget tracker made by Polka Dot Posie on Etsy (click photo for link)

A colorful budget tracker made by Polka Dot Posie on Etsy (click photo for link)

Budgeting is the #1 most important thing you can do if you want to stop being broke & cranky.

It might be helpful to look at our preconceptions for a minute. How do you react to terms like “budgeting” or “finance tracking”? Do they sound boring and lame and restrictive, like some form of life-draining torture invented by overly serious adults? Surely us cool kids don’t want to have anything to do with that stuff, right? We’re living free & easy here…keep away from us with those spreadsheets!

But here’s a common pattern: when we’re in our teens & early twenties, we’re just starting to earn our own money. I’ve got a job now! I can buy whatever I want! Maybe we go to college & take out some loans, or we discover credit cards & run up some debt. We do this for several years, without saving money. Then when we’re in our late twenties or maybe thirties, all of it catches up to us. Now I’m broke, have crazy debt, no extra money for anything, can’t save, can’t even go out to eat!

Free & easy has become broke & cranky.

It may sound weird, but in order to continue living free & easy–that is, having money to spend & not being overly stressed about your finances–at some point you’ll need to do some budgeting. Taking responsibility for tracking your finances is in the service of freedom…you do it because you want to travel, do stuff, pay for things that enrich yours & others’ lives. And you do it because you don’t want to become one of those stressed out, cranky adults who worry all the time about money.

If you’ve never made a budget before, it’s not too complicated…you just write down what you expect to spend in different categories each month. This expands your week-to-week/paycheck-to-paycheck mentality to a larger month-to-month view, and lets you get a higher level look at what’s really going on with your money.

A monthly budget looks something like this:

A simple example budget, based on a monthly income of 1600$.

A simple example budget, based on a monthly income of 1600$.

You’ll want to “spend” your entire monthly income within the budget, so (as in the example above), if you make 1600$ per month, you divide all 1600$ into your categories. Savings counts as an expense, so even though it looks like you’re making the entire 1600$ disappear, some of it is staying with you.

About some of the categories:

  • “Spending Money” is like a monthly allowance you give yourself, to spend on whatever you want (clothes, going out, books, music, etc).
  • “Monthly Fund” is for random expenses that inevitably come up, medical/vet bills, car troubles, fees for this or that. If you don’t use it all in one month, that’s great–but save it for later because you *will* eventually need it.
  • “Savings” is for money you’re not going to touch unless you really, really need to. You can think of it as an emergency fund, which is generally your first priority for savings (after you’ve built up a decent emergency fund, you can save for other things).
  • “Debt” is for repaying credit cards, student loans, personal loans, etc.

After you’ve written out your budget (congratulations, by the way, this is a huge step!), keep it somewhere you can look at it & use it often. It will be a guide for setting up your finance tracking.

Part Two: Finance Tracking

Writing down what you spend enables you to keep an eye on where your money is going. Are you sticking to your budget? If not, where exactly are you overspending, and what can you do about it?

You’ll need somewhere to lay out your budget categories, with space to record your expenses. If you’re using a paper planner or notebook, you can set aside a few pages each month with space for each of your budget categories.


In a small planner, you can use one page per category (with recurring bills together on one page). Other categories are on other pages.


A fresh budget set up in a large Moleskine, with everything on one spread.

Above, you can see how different categories take up more or less space. Typically, you can fit all your recurring monthly bills together on one page or in one small space, while categories like food & spending money, which have many entries per month, need more space.

Whenever you spend money, write it down in the appropriate category. If you buy 50$ worth of groceries, write 50$ in the “Food” section. If you go out to the movies, write 10$ (or whatever) under “Spending Money.” When you put some money away into savings or your monthly emergency fund, write that down too. As the month goes on, try to make sure you’re not spending more than you’ve budgeted in each category. If you can do that, you’ll live within your means AND save some money!

About saving money–if you’ve never done it before, you can work up to it gradually. Just start small…can you save twenty dollars a month, or just 1% of your income? Save twenty dollars (or 1%) for a month, then the next month, increase your budget for savings to forty dollars (or 2%), and so on. “Experts” recommend that you save 15% of your income. It’s something to aim for, but if you’re just starting to save, don’t feel bad if you can’t get there right away. I’m still not there yet either.

Lately I’ve given up tracking my finances on paper & moved to a budget tracking app. In my opinion, this is one area that’s best handled digitally. You can keep track of a whole ton of info in one view, with the ability to easily change any of the numbers without crossing things out & making a big discouraging mess. Finance tracking involves a lot of piling up of data on top of other data, adding numbers to stacks where most of the time you only need to see the tops of the stacks. Having one simple, neat interface that shows all your important numbers (behind which your complex day to day entries & calculations are tucked away) is great. And the easier your budget tracker is to deal with, the more motivated you’ll be to stick with it.

I tried a few different apps before settling on YNAB, which I love so much I spent money for it, even though I’m cheap & there are several other free budget trackers out there I could have used (Mint is a popular one). YNAB stands for “You Need a Budget” and looks something like this:

Main budget screen of YNAB

Main budget screen of YNAB

Above, I’ve set up an example based on the 1600$ budget used earlier. You can view three months at a time in the main area, where you record all your monthly spending, and along the left (in the blue area), you can keep track of whatever numbers you want…like how much debt or savings you have in different accounts; or if you’re self-employed, what expenses you have in different areas & estimated tax info; or if you want to save for a particular purchase, give it an entry & track your progress in saving up for it. Basically, with YNAB you can have a full overview of all the financial data relevant to your life, all in one neatly organized place.

The YNAB folks also have a great website with tons of helpful articles, tutorials, videos, and forums about budgeting & other financial smarts. The software costs 60.00 but if you use this referral link they’ll knock it down to 54.00 (you can start with a 34 day free trial to make sure you like it). You can also use the software for free as long as you’re a student. If you have a smartphone (Android or iOS only at the moment) you can also use the free YNAB app, which cloud syncs with your PC or Mac version. YNAB supports multiple budgets, so you & your significant other (or whoever else you mingle funds with) can each have your own budget, or you can have separate business & personal budgets for yourself. It’s rad. Try it! If you don’t like it come back here and yell at me.


YNAB also has lots of data visualization toys you can play with, if you like that sort of thing!

Part Three: Mind Training

Whether you track your finances in your planner, your phone, your computer, on a big whiteboard or a little piece of paper folded up in your wallet, it’s a practice that can have an enormous positive effect in your life. It’s even more effective if you combine this tracking with training. By “training,” I mean using some mental tricks to steer your mind where you want it to go–in this case, wasting less money and building some savings. Here are three that you can write down in your planner near your budget, tape to your wall, or stick in your wallet:


# 1: “Not now, maybe later.” This is from Possum Living by Dolly Freed. Whenever you’re about to buy something you want but might not immediately need, think to yourself, “not now, maybe later.” You’re not absolutely saying no to it, you’re just not buying it right this second…instead, you’re letting it percolate in your mind for a while before you spend money on it. You’re telling your brain: that’s a nice thing, maybe we’ll buy it someday…but just not right now. You’ll end up spending a lot less money on impulse buys and shallow wants, while not feeling like you’re depriving yourself.

# 2 : “Always remember not to give up what you want most for what you want now.” This is sort of the reverse of #1: maybe later (a vacation, nice place to live, classes, offspring), so, not now (going out to eat all the time, more books/music/dvds/video games than you have time to read/listen to/watch/play). Remind yourself of what you’re saving for, the big things that you’re working hard for & looking forward to. Weigh those against the little things you want today. It’s really sad that we can’t spend our money on the important things that really matter to us in the long run, because we’re so busy buying random crap we don’t really need but that we want right now.

# 3: “Do I really want to trade my life/soul for this?” When you get paid for your time & labor, you are exchanging part of your life for money. It’s easy to look at lifeless paper bills–or even more abstract, at digits on a screen–and forget what they really stand for. That money is a concentrated form of your life…part of your radiant soul that you can stuff in your wallet (remember when they opened the briefcase in Pulp Fiction?). Don’t waste that precious material! Think of your money as chunks of heavy gold that have been condensed from your life, and don’t part with them so easily.


I hope you can take away something from this ode to budgeting & make good use of it! Getting control of your finances is one of those wonderful things in life that take so little effort, yet give crazy big returns…it’s not like having to do thousands of reps of some tedious exercise before you see any progress. You can get started right now, tracking your spending for the rest of this month, getting into the habit…then next month can be your first fully budgeted & tracked month. Do your best…ganbatte!

“Ask yourself what you aim to be and what you should be doing. Are you living the life you ought to be living? If yes, then good luck to you. If not, then start taking control of your life.

It can be done. It should be done. Do it. You don’t have forever.”

//Dolly Freed

Share this: