Zen & the Art of Budgets

I'm a big believer in budgets. Whether it's for the government or your Saturday night party, I think it should all begin with a budget. Yet the number of people I talk to that don't have a household budgeting system is amazing. Bills come in, money goes out and by the end of the month you're standing in front of the ATM scratching your head wondering why you can't take out your remaining $17. 81.

I think one of the biggest obstacles to starting a budget for yourself is that it all seems so daunting. Between the Rich Dads, the Suzees, and the Daves, it can make your head spin a little. Everyone wants to have you make that scary list--you know, the one where you list every penny coming in and every penny going out. That list that reminds you that you spent more last month on high speed internet than you did on vegetables. That the handbag you charged could have been a 401K nest egg. "What's the difference," you think, "if I just buy a grande Caramel Macchiato? It's not like it could be my son's college fund."

The main benefit of pulling up your big girl or boy panties and taking a long hard look at what you spend every month is that most of us have the Perceived Truth about our lives and the Reality. It's like when you're trying to drop a few pounds--you think you had a good day because you went to the gym for an hour and you had a salad for lunch, but when you really see it in black and white you notice that you went to the gym at 5:15, spent 10 minutes chatting and changing, then left at 6:10. Your hour just became 45 minutes. Never mind that the salad you had came in a fried tortilla bowl that mysteriously lost one of it's sides halfway through your meal. That's why a food diary can play a big part in your weight loss success: it is your cold, hard truth.

Similarly, a household budget can be your friend. Your perceived truth about your finances might be that you don't spend that much on groceries or going out to eat, but the truth might show the contrary. Going out to eat might suggest you were seated by a hostess and had a leisurely meal with family or friends. However, when you budget, you'll need to be honest with yourself and admit that the muffin with coffee you pick up on the way to the office, the bottled water you buy at the mall because it's so dry in there, or the bottle of wine you pick up to take over to a friends house Saturday night while you complain about men (or women or The President) need to be a part of your budget.

Once you get a handle on the truth, it will probably take a while to sink in: you'll go through denial for a while. Next comes acceptance. Is this starting to sound familiar? After acceptance comes the big choice: fight of flight! Fight for your money! You earned it, why are you letting everyone else take it?

So, the first step is to honestly write down your income and then your expenses. Then it's time to see what you can do to improve each category:

Once you've budgeted your needs, brainstorm on ways to make them cheaper
Yes, you may have a fixed rent or mortgage but is there any way you can shave some of the cost by dropping PMI insurance, looking for a better deal on home or renter's insurance?

You need to see and surf, right?
When you moved into your place, you might have just called the utility companies you were familiar with and called it a day. These days, you can save major bucks on everything from phone service to DSL to cable. There's so much competition that even if you stay with your original company, you can call them and say, "I'm looking at other options. Do you have some special offer or plan you can recommend so I don't leave your company?" It takes 10 seconds to say and you might be happy to hear that many times, yes, they can do something to keep your business.

While we're discussing needs, do you need 155 channels?
I know some people will be horrified at this suggestion, but if you want to save about $30+ a month, try basic cable. I couldn't stand the $50 cable bill I was getting each month and the pitiful lack of entertainment that kept me in an endless clicking loop with my remote control. Between my basic cable (which is almost 30 channels, enough to make me feel like I'm not living in exile) and the latest trend of networks putting their once-aired programs on the internet for free viewing, I don't feel I'm missing anything. Besides, it's fun to sound snobby and sniff, "I really don't watch much t.v." while your workmates talk about the latest bubble wrap dress from "Project Runway."

Food & The Magic Disappearing Produce
I have good intentions here, honest. I'm not one of those people that say, "Eat beans for every meal! They're cheap and filling!" I mean, yes, they are those things but if you're a sushi 3-times-a-week person or a Sunday pot roast kind of eater, suggesting a life of lentils and beans isn't going to win me any friends. Come to think of it, the beans might not win you any friends either. I'll cut to the chase: eat what you buy. I know, it sounds crazy, but I dare you to go over to your fridge right now and tell me what you see. Let me guess: maraschino cherries (because you never know when you're going to need to shake up a Midori Sour,) petrified block-shaped rice left over from the Chinese take out place, and something in the produce drawer that used to resemble lettuce. It's hard to tell because it's neither green nor solid, whatever it was. (Rest in Peace!) When you go to the market, make sure you're buying things that will go together will several meals, that you use every bite of that food, and once a week brave that produce bin! Throw everything in there into a pot with some water and bouillon and make a vegetable soup before your expensive veggies disappear into a watery mess in your Frigidaire. Freeze your leftover portions of anything, even if you're a "I don't eat leftovers" person. Freeze them, pack them for work or slap a piece of masking tape on the container that says, "Healthy Choice." Hey, if you pay $4 at the store for their frozen leftovers, why won't you eat your own? You will be amazed at the amount of money you have left over each month if you shop smart and actually eat what you bring home.

That's Entertainment
Okay, we've covered the basics and now come to most malleable of expenses: entertainment. Your entertainment may not be the same as mine. I actually put "cable" in my entertainment budget but you might consider it a need, right up there with water and oxygen. I consider it entertainment, along with movies (cinema or Netflix), going out for a latte, newspaper or magazine subscriptions, and any form of eating out. If I didn't make it in my kitchen or it isn't free, I consider that eating out. Evaluate what you can do to bring these costs down: can you bring your coffee from home in a travel mug? Throw a "Sex & the City" party at home for your pals instead of going out to eat? Do you even have time to read the magazines you receive or would it be just as easy to wait a month and get them for 10 cents at your local library? This is where I should whisper that "shopping" should not be part of your entertainment budget. I know, it stinks. Wardrobe is a need, but should not be considered entertainment. I give myself a small monthly allowance for entertainment and when it's gone, it's gone. No borrowing from next month's allowance, no using the credit card, no nothing.

Zen is free
To make these small changes, I had to tweak my way of thinking. Instead of "Where can I go to have fun? What can I buy? What will I order to eat?" I've gradually morphed my thought process. Now I ask myself, "What can I do outside? What can I make? What can I cook out of what's left in the pantry?" It does take work, but most things worth doing do and there's nothing to lose if you try it for a month. You'll usually find that your budget is fatter at the end, you'll have more to put into your saving account or 401K or college fund and that it was relatively painless. At the very least, you'll have the peace of mind that comes from knowing the truth about where your money went and you might just have the clarity that the things that matter to you don't cost anything at all.