Early access originally posted on August 27 for $5+ patrons.
First things first: Thank you so much to everyone who’s taken the time to complete the survey and/or share it.
When considering some of the responses to the survey, I thought of something my ice skating instructor told me of the difference between teaching adults and teaching children how to skate. What he said was that adults have walked around a lot more than children have, and that gets them into trouble when they start skating; adult beginners (like me) are more likely to try to walk to move across the ice, making it harder to learn to move correctly.
Just as muscle memory of walking creates challenges with learning to skate, some money habits that have brought us to where we are now can hold us back from learning budgeting.
For example: deciding what to spend based on the amount that’s left in our account. While it is undoubtably better than having no awareness of our money, at the foundation of this method is the idea that the amount we can see tells us how much we can spend (on food, entertainment, upgrades, etc.) and holding onto that idea can hold us back from reaching our goals.
ALERT: Number nerdery detected ahead!
- I earn $1000 twice a month (once on the 1st, once on the 15th).
- I have rent of $1500/month, due on the 1st; magically, I have no other bills to pay, but I do have to buy food.
- It’s the 20th, and my balance shows as $600.
What can I afford to spend between now and the end of the month?
If I spend $600, then when I am paid on the 1st, I get my $1000 paycheck, but my $1500 rent is due. I’ll be $500 short.
Ok, so $500 less. If I spend $100, then I’ll have $500 in the account on the 1st and the $1000 paycheck, so I will have enough for the $1500 rent. But wait, then my balance will be $0 until the next paycheck on the 15th! How will I buy my food?
As you can see from the example, even though the balance is $600, I should probably only spend $50 or less between the 20th and 1st, so that I have $50 left for the 1st through 15th.
Number nerdery, extended edition:
Now let’s say that it’s next month, the 15th comes around and I’ve borrowed $25 from a friend to get through. So from last 20th to today, the 15th, I only spent $125, and rent. I receive my $1000 paycheck.
What should I do between now and the 1st of next month?
Step 1: Set aside $750 for rent (that’s half the rent, and this $1000 paycheck is half the month’s pay). [End of step 1: $250 of the paycheck left]
Step 2: Pay my friend the $25. [End of step 2: $225 of the paycheck left]
Step 3: In this example, I’ve been living on maybe $75 or less for the last couple weeks. I could do it again, lots of people do, but I don’t want to. Do I spend $225 in these next couple of weeks? I could. Or… I could double what I spend in the last couple weeks ($75*2=$150) and limit myself to that. It’s still a huge increase from what I had last week, but still leaves me a little bit more… [End of step 3: $75 of the paycheck left]
Step 4: Like I said in step 3, I don’t want to live on $75 for two weeks again, so I’m going to put the $75 I have left into an emergency savings account, so that I have a little more peace of mind. [$0 of the paycheck left]
Going forward, I will of course be checking my balance to be sure that transactions go through when I make them, but I won’t be using the balance of my accounts to determine what I can spend. What might have previously been my sole method of tracking money is, for the most part, not relevant, and could give me the impression that I have more money available than I actually do.
Returning to Reflection
As I’ve discussed with many people, beginning to manage money through budgeting is just that: a beginning.
I’m enjoying these topics people are suggesting, but I really would like to start at the beginning. My philosophy of budgeting has developed over the years with more influences than I could even know, much less remember, and as I talk with more people, my understanding becomes more refined. Successful and joyful budgeting is not just a practice but a way of thinking, a way of being.
With that in mind, I would like to humbly ask for your continued assistance and sharing, so that in October, I can post an introduction to budgeting. I will release details of this project publicly on Patreon tomorrow, but I want to share with you first:
Bite-Sized Basics: An Intro to Budgeting will be a 5 “bite” series launching October 1, with 1 “bite” per week throughout October, if we reach $500/month.
Each “bite” will consist of
- 1 page or less of text
- 1 worksheet with questions or an exercise
- An example, in some cases (also not even a full page of text)
Everyone who gives $1 or more will get their name on the thank you page of the PDF of all 5 “bites” (if they so choose), to be released digitally for patrons on October 31.
A couple notes:
1. If we don’t get to $500/month, production and release might be delayed 😦
2. These bites would post in lieu of reflections in October, but I would still love to receive requests for reflection topics.
Look out for tomorrow’s sharable post about #BiteSizedBasics, and thank you for your continuing support and feedback.