Archives For Budgeting

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This last month we missed out monthly budget party. I figured we have budged for 81 straight months! Pretty good streak if you ask me; comparable to the Harlem Globetrotters 2,495 straight wins over Washington Generals. (32 other famous sports streaks)

It was a time of flux, transition, and [insert excuse here]. So my wife and I failed to have our monthly pow-wow over how we’ll spend our money and guess what…it didn’t matter that much.

6 Years of Budgeting and Marriage

A funny thing happens after 81 months of marriage and learning how to communicate about money–namely you figure out a plan and stick to it. That’s what ended up happening for the most party. We did what we always did.

I still kept up with spending and found out that groceries were pretty much the same, under actually. We did go a bit crazy with eating out, but that was part of the transition and celebrations over job promotions.

Our budgeting streak is over, but we had a good run. We do plan to jump back on the budgeting train; after all our income will be increasing, so we need to really keep our eye on the ball.

If you want to learn how we budget or tips on budgeting, read this series of articles about budgets.

Typical Hipster in NYC

These days hipsters are everywhere. There are a few I’d even consider friends (yes, geeks and hipsters can get along).

I remember a time I didn’t know what a hipster was. Wait you don’t know either or want to be a hipster just because it is deck (cool)? That’s just stuff hipsters say.

Hipsters gotta earn money and budget too. Here are some Hipster tips for your finances.

Side Hustle Like a Hipster

  • A typical hipster income might be from graphic design, jewelry design, or anything with design in the name. Need a guide to finding a hipster job?
  • You could also make some side money from the chicken eggs you harvest in your Brooklyn apartment or sell homegrown organic vegetables. Those DINKS Uptown will pay a bundle for your organic goods!
  • Protest for pay. I see those ads on craigslist all the time…I wonder if they are a scam?
  • Be a tourguide of Williamsburg, Broooklyn (home of hipster) to out of town hipsters.
  • Paid reviews of music and books. Trick is you have to hate everything not mentioned on Pitchfork.
  • Sell something at a farmers market. Make it, grow it, knit it, and then sell it at 200% markup at a Farmers Market no one has ever heard of. Deck!
  • Make your own home brew or roast your own coffee beans. Organic and Fair Trade of course. Take out an ad in the Brooklyn Vegan and you’re set.


Budget Like a Hipster

There are certain items that must be included in a hipster’s budget.   Here are a few:

  • Home brewing equipment. PBR is so 2011.
  • Yarn for knitting your own I-pad covers.
  • Clothing is such a large percentage of hipsters budget that each clothing item gets its line item: Fedoras, scarves, shoes, vintage T-shirts, skinny jeans, new shoes that look old, flannel shirts, big watches, handmade jewelry, hipster glasses, etc.
  • Counseling because they are being labeled as a hipster and can’t deal with being put in box.
  • Yearly Airfare to Williamsburg to soak up the essence of hipster and eat at the hipsterest places on the planet.
  • Tattoos– Better save up for that full sleeve tattoo…it’s gonna cost you.
  • Indie Music and Shows– Rare music is going to cost you, especially when you’ll have to ditch your favorite band once 5 other people like them. Oh yea. you’ll need a lot of dough for vinyl.
  • Vintage Bike repair. Your beach cruiser will need some fixing from time to time. How about a new basket to hold your vegetables from the farmers market?
  • Apple- no not the ones you eat, but you’ll need to save up for the latest Apple products in order to stay hipster. A Blackberry is so 1%.
  • Bail- You’re going to protest and probably get arrested sometime this year. Go ahead and save up for that bail $.
  • Food- Hipsters don’t eat. They only drink coffee and nibble on organic vegetables. Meat is out of the question, a very frugal move indeed.

Hopefully you’ll find these funny and I don’t get flamed from the hipster community. Hipsters, I’m secretly jealous I’m not as cool as you. If you really want to know how to budget please read my How to Budget Like a Pro Series.

Help ensure this article is up to Hipster Standards. Any suggestions or additions to my lists are welcome in the comments below. 

Photo cred Joel Bedford

budget as artist

How do you budget as an artist?

No longer do we work at traditional 9-5 jobs for 40 years and then retire. We live in a gig economy of contract workers, freelancers, and solopreneurs.

We weave in and out of traditional jobs starting our own business and having side hustles for extra income. This new reality changes the way we’re paid and thus how we budget our money isn’t “normal”.

Most personal finance books are great–if you have a traditional job with a predictable income of 26 paychecks each year.

I’ve noticed there is a large gap for those trying to do money smart in the gig economy–especially when I was coaching artists and freelancers in Los Angeles.

That is why I’ve asked several financial experts: personal finance writers, financial coaches, and previous financial advisors to weigh in on the subject of budgeting and living on a variable income.

I hope this a helpful resource to begin budgeting on a variable income.

1. What Advice Do You Have for Someone Living on a Variable Income?

Joe Saul-Sehy: Budgets love similar expenses….the same payment every month makes budgeting a breeze. My clients with big income spikes faced a dilemma: make lots of money and eat filet mignon or make little and eat ramen noodles. This boom/bust cycle of income created huge spurts of unintentional spending that would destroy a budget. So, what did we do?

First, we got ahead of the game by putting money into a reserve. Second, we set up the income stream so it paid into the reserve account. Third, we created a “paycheck” out of the account that we knew was sustainable so that we could keep a consistent budget. In this way, even though money came in and out in spurts, the family was able to predict how much they’d have available for expenses.

Even better news? Whenever there was WAY too much money in the reserve account they could “bonus” themselves for large purchases, vacations, or extra savings. Listen to his Stacking Benjamins podcast

Matt Becker: In our family, I am the primary earner and my wife stays home with our son. But she also runs a part-time counseling practice and has recently started bringing in some meaningful income. We’re factoring this income into our budget in the same way I would recommend anyone with variable income should: by estimating on the low end.

We have budgeted in an amount that is fairly safe to expect every single month, and any extra is then available to put towards whatever savings goals we’re focusing on at the time (right now that’s a house). By estimating on the low end, we’re making sure that we’re not over-extending ourselves in either our spending or our saving.

It’s also a nice little mental trick, as any income above that amount feels a little like “free” money, which makes it exciting to put towards our goals in addition to our regular savings. It feels like we’re accelerating things, even if the effect is the same as if we had budgeted it from the start. Sometimes the behavioral aspect of personal finance is just as important as the practical aspect. Find Matt at Mom and Dad Money.

2. How Do You Budget With an Irregular Income?

Grayson: Budgeting when on an irregular income is one of the hardest things to do. Since you don’t have much of a constant, you will have to learn to budget without a constant. The only constants that you can keep when budgeting are the bills that don’t fluctuate each month.

If you have a mortgage, car payment, and any other regular monthly payments, then you will have to keep these constant. You first have to make sure that you can cover these expenses.  You should setup your budget based on your lowest take home income over the past 12 months. Yes, this is a guessing game, but if you can successfully budget based on the lowest amount that you have taken in the past, then you should be good to deal with any extra income.

Steve Stewart: My wife and I used a spreadsheet I created to manage our budget. In that budget there was an area for entering our expected income. When our income didn’t meet our expectations – or we received some unexpected money – we simply changed the income totals and adjust the spending/saving categories to match. Now we use YNAB which cause us to use this month’s income for next months expenses. We barely notice irregular income because the money is already there waiting for us to spend (no mid-month adjustments needed).

Miranda Marquit: I don’t have a set budget. I have a spending plan in which the most important spending priorities are taken care of first. I make sure I have enough to do things like pay the mortgage, contribute to my Roth IRA, and fund other important items. The rest of the money is just used until it’s gone (or there’s carryover to the next month). To me, it’s important to make sure the important things are covered, and then it doesn’t really matter what happens with the rest of the money.

3. How Do You Save Money With an Irregular Income?

Grayson: I am an advocate of saving money each and every month, but when you have an irregular income, this is usually not possible, or at least much harder to do.  If you can create a budget based on your lowest take home income that you had over the past 12 months, then you should be able to create a savings plan.
If you make more than your budget, then you need to save that overage.  You should save as much as you can because there will be months where it will be harder to save.  Focus on figuring out ways to save more or make more money on the side. How Can I Save Money?

4. What Personal Experience Do You Have Living With an Irregular Income?

Edward Antrobus: The biggest thing to remember to do when living on an irregular income is to base your budget and standard of living off the low end of your income, instead of the high end. Sometimes that just isn’t possible (my unemployment in the winter only covers 2/3 of my expenses).

In that case, use the excess in the high weeks to save for the shortfall in the low weeks. Put this money in a separate account that doesn’t have any debit card, checks, or any other way of accessing the money than going to the bank or online interface. If it is at another bank altogether, that’s even better. Read more from Edward about irregular income with seasonal employment.

Steve Stewart: I have been a part-time mobile DJ for over a quarter of a century. Wedding and Christmas seasons were always busy and the rest were often slow. This was a larger part of my income when I was single – which was also the time of my life when I didn’t know how money worked. My best friend and I shared a nice apartment but after 6 months I had to move back into my parents house. I just couldn’t afford the place my friend wanted to live in so I had to bail. It definitely strained the relationship even though we are still best friends. Listen to his podcast The Absolute Simplest Budget That Works.

Miranda Marquit: I’ve had an irregular income since 2005 when I went back to school for my journalism M.A. However, I’ve tried to land enough regular gigs that the survival basics are covered, so the irregularity of everything doesn’t impact as much. Since I’ve always been the primary breadwinner, an irregular income is pretty much a way of life for my family.

Do you live a gig life and have a variable income? How do you budget your money? 

Have you ever heard of using the envelope system to budget? Envelope budgeting is an old technique that is coming back in fashion faster than big glasses and flannel shirts.

What is it? Budgeting with envelopes is simple. Certain categories you’ll designate to pay only with cash. You put that cash in an envelope each month and when the money is gone–its gone, no more spending for that category.

Why use Envelopes for Budgeting?

  • You’ll spend less money if you use cash. People who use credit or debit cards have higher spending rates? Why? It is due to a slight feeling of pain when you use cash. It’s true, try plunking down $100 cash for your next grocery bill.
  • Savings. We have an envelope for a future trip to San Francisco. When it fills up, we go!
  • If you constantly overspend in certain categories, this will help you curtail that spending.
  • If you get paid in cash or tips this system will give that cash somewhere to go, besides buying pizza. It will focus your money and you’ll think that you’ve got a raise.

Envelope System Video by 

Budget with Envelopes

1. Determine what categories you’ll spend “cash only” for. Common categories are groceries, eating out, blow money, entertainment, clothing, and gas. TIP: Don’t try to start too many envelopes at once, but incorporate a few each month as you get the hang of it.

2. When you budget add up the total you’ll need each month to fill all your envelopes. This may take a few months before you’re a pro and some months will require more cash than others.

3. Make envelopes for each category and fill them up with cash- Write a check to yourself or withdraw it from the bank. Some categories may be large like groceries and you’ll need to fill them twice a month or as you are paid.

4. Keep a ledger of on each envelope of when money is deposited and spent. This will help you track your cash and know how much you’ll need each month.

5. When the envelope is empty, STOP SPENDING! You made a budget, now stick to it. Don’t borrow from other envelopes or add more cash. You’ll have to say no until next when you get more cash in that envelope.

6. If you have extra cash, then it stays put and rolls over to the next month.

Some people also like the idea of ‘virtual envelopes‘, but I find that having cold hard cash in your hands is the best way to curtail my spending.

Using this system doesn’t work for everyone. If you stay with it through the learning curve, you’ll start saving money by spending less. My wife and I started out with about 8-10 envelopes ourselves, but at the moment we only use 4.

Action: Try using the envelope system and let me know how it goes in the comments. 

(Photo by BillRhodesPhoto)

[This is part of my How to Budget Like a Pro blog series]

April is Financial Literacy Month and we celebrated by making a video. Check it out and share with your friends.

How to Have a Budget Party Video

 

5 Rules for Having Your Own Budget Party

1. Invite your spouse and schedule the party. Don’t spring it on them the last minute, they’ll freak out. 

2. Bring snacks to entice your reluctant spouse to attend. Party hats optional. 

3. Bring a timer – no more than 30 minutes or the reluctant spouse’s eyes will glaze over. 

4. Come prepared with the previous month’s budget, a calendar, and your current month’s budget proposal. 

5.  Agree. If you can’t agree, then you’ll have to go into party overtime until you can shake hands and play nice. 

Enjoy your party! Let us know the outcome when you throw your own budget party. If you like this video be sure to subscribe to Ontargetcoach.com and stay informed.

Check Out These Other Financial Literacy Month Videos