First of May, First of May, Brand-New Budget Starts Today
So now that it’s the First of May and I can finally start putting my new savings plan into action (as a quick recap, I want to put 20 percent of every freelancer payment into a “taxes” saving account, 20 percent into a “debt” savings account, 10 percent into actual savings, and keep the other 50 percent for overhead and discretionary expenses), I’ve started to think about what that might mean in practical terms.
During one of my weekly Tumblr financial roundups, for example, I calculated how those percentages would have fallen out had I put this plan into action in March:
If I had done this for March’s “total money that hit my bank account,” which ended up being $5,539.41, it would have worked out to:
20% savings: $1,108
20% debt: $1,108
10% savings: $554
Left over: $2,770
As I wrote for The Billfold earlier, I have an approximate $1,500 overhead cost (rent, food, bills, etc.), so that would leave me with $1,270 in discretionary income. If I earn less money in any given month, I still have a lot of wiggle room in this budget.
I can already see a big honking problem with this plan, though, at least for May: I have a bunch of expenses coming up at the beginning of the month, and all my big freelancing checks don’t start coming until the middle and end of the month.
Here are a bunch of the expenses that I expect to have between May 1 and May 15, for example:
—Salsa dancing with friends: $15
—Food/drink after salsa dancing: $25
—Another (already scheduled) dinner with friends: $20
—Seeing Avengers: Age of Ultron: $15
—Paying for Lindy Hop 2 classes: $60
—Buying a birthday present: $40
—Friendcation in Portland: $150 (after I bus down there, it’s just food and drink for two days)
(Mother’s Day isn’t on the list because I took care of that in April. Pro-active.)
Total estimated expenses: $475
Meanwhile, the total estimated freelancing checks I expect to receive between May 1 and May 15 equal $600. So… $120 to taxes, $120 to debt, $60 to savings, and $300 to expenses.
I already start the month behind.
What’s clear with this financial system, then, is that I’ll have to plan ahead to make sure I have money at the end of the month to cover the beginning of the next month. That estimated $1,270 discretionary income that I listed above? Maybe I had better think about keeping at least a third of that aside, so I have cash in my bank account for that gap between Day 1 and Day 15 when I don’t get any big freelancing checks.
This is why budgeting is hard, and you don’t need me to tell you that budgeting is hard. Budgeting is also hard because we commit to things before we know if we have cash in hand to cover them—what am I supposed to do, tell my friends that I can’t see them tonight because the financial rules I set for myself say I can’t spend $15? (I mean, some people do. Maybe I should. Maybe I’d be better with money if I spent every evening sitting at home and staring at the wall—or, at least, thinking of myself as a person who needs to ration her excursions.)
I mean, this budget will work for May because I do have a little bit of cash to cover May 1-15, and if I keep in mind that I’ll need to save some of May’s cash to cover June 1-15, it should work for June too.
But budgeting is hard.
You don’t need me to tell you that budgeting is hard.
Photo credit: Jennifer Woodard Maderazo