moneyManagement 101
A Student’s Guide to Austerity Budgeting
Flatiron School: A three-month intensive programming “boot camp” where adults learn how to code.
There’s more than just the pressure of absorbing so much material in twelve weeks, though. One has to account for everything involved in a personal endeavor of this magnitude: preparation before the course starts, the indefinite time before a new job is found, and the course itself. But I’m not just speaking about code here.
I’m talking on a financial level.
Flatiron is full-time, as demanding as any regular office job and then some. There isn’t time or energy for a second job, which means no paycheck until after graduation, which in this case falls right before the holiday season. Jobs might be available then, but feasibly speaking, who would hire until after the new year begins? We’re looking at nearly four months with no new paycheck forthcoming.
Austerity: a state of reduced spending and increased frugality in the financial sector.
Now, I’m not rich, to say the least. In fact, I was lucky to make enough at my past jobs to not have to worry about my bills until February. But I did use nearly all of what I’d earned to set that much aside. That still leaves me with about fifteen weeks of living in the city, where I’ll want to eat, hang out with friends, buy necessities here and there, and the occasional Kickstarter purchase (because sometimes those projects are so awesome you just have to back them).
Conceptually speaking, I had a number of options ahead of me. If I gathered all of the money I had left available to me, I could parse it out slowly, mimicking a paycheck. Then I could budget my needs accordingly and free my mind to work on code, instead of worrying over my austerity budget.
How often should I dole out this money? How long between days is too long? What if I spend the partial sum too soon, and run out before I give myself more? What happens if I completely overspend and there’s absolutely no money left?
I figured the best way to allay my spending fears is to give myself money every day. An allowance of sorts. A daily allowance, where I’ll always know how much I currently have and am able to spend, with an easy way to see how much I have remaining to get me through the rest of the course.
Once I decided this, everything began to unfold naturally.
I would give myself a dailyAllowance (if you will) for the duration of the Flatiron course, from the Saturday before it started (9/26) until the day it ends (12/18). That’s 84 days. But why stop there? I probably wouldn’t get a job until January. So adding in the rest of December is 97 days. The chance that I’d get hired on January first is quite a long shot, and I’m counting down until my first paycheck, not my first day on the job. So add in some more days of January, just to be safe.
All in all, I decided on 115 days (ending January 18th), because that number felt pretty auspicious to me (I like when my numbers add up to 7). Plus it’s divisible by five. An easy number to do math with, especially for the next part of my plan.
Money is easy to spend. Too easy. It’s why America is based on industry and capitalism. The cost of living in NYC is especially high. I wanted to make sure I had some leeway in case I was ever in a situation where I had to spend more than I had budgeted for .
I decided I would save my birthday money for special things. It’s special money, after all, and intended to be spent on fun things. At least, I always try to save it for non-necessity purposes. (Just because I’m on austerity doesn’t mean I should sully the sanctity of birthday money by spending it on things I’m not overly excited to buy.)
Since I probably won’t have exactly $460 (115 * $4) or $575 (115 days * $5) or any other dollar amount perfectly divisible by 115, I can count on some random cent amount every day. Just imagine the trouble a dailyAllowance of $4.73 would become after only a few days in! I’d be overly laden with coins. But round that down to $4, and then there’s $0.73 every single day, just floating around, designated to nothing. $0.73 after 115 days is $83.95. Wow!
Well, I can add it all to my bonusPool of money, specifically intended only to be spent in an emergency or when there’s something I really, really want (like this aww-inspiring game Home Free on Kickstarter. So cute!!). Over $80, added on top of my birthday money? Not bad. Not bad at all.
Some conceptual math using variables in camelcase:
dailyAllowance = rawPoolOfMoney / totalDaysroundedAllowance = dailyAllowance rounded down to the nearest dollarallowanceRemainder = dailyAllowance — roundedAllowancetotalRemainder = allowanceRemainder * totalDaysbonusPool = totalRemainder + specialMoney
That allowanceRemainder could be anything from a single penny to $0.99, which means my totalRemainder over 115 would be anywhere from $1.15 to nearly $115!
Well then.
Things are certainly shaping up!
The next step is to determine how much money I can live on. Once I decide the amount I should give myself every day, I can do some simple calculations to see how much I’d need in my allowancePool to make that possible. Depending on how much money I can gather in cash and my checking account, I might need to pad the allowancePool with money from my savings account as well, just to make this budget — and those four, jobless months, manageable.
But how much should I go for? $3/day? I’d only need $345 for my allowancePool. That definitely seems feasible. But even though I know some people can eat on less than $1/day, that feels really presumptuous in NYC. And what about going out to eat? At only $21/week, that’s hardly enough for a nice meal plus tip, let alone all those groceries I’ll have to buy to make my own meals the rest of the time.
What about $4/day? With an allowancePool of at least $460, that still seems pretty reasonable. $28/week is a little better, but that still would probably only amount to my weekly groceries. Maybe I could go out to eat at a really cheap place once or twice a month. Maybe.
Thinking really avariciously, what about $7/day? allowancePool would be $805 (whoa, that’s more than my rent), but I would get $49/week. I could totally eat out once or maybe even twice a week! How wonderful! I could do that, I’m sure, but I’d need to utterly deplete my savings. I didn’t quite want that, considering I might not have a job by the time my allowancePool runs out, and then what? I’d have to find alternate means for money, which after all this time and thought doesn’t feel ideal. I should at least try to avoid that fate.
So I figured $5/day would be a good amount to aim for. At $35 a week, I can afford groceries and maybe go out to eat every once in awhile. I definitely wouldn’t starve, but I’d still have to be methodical and pedantic about the food I buy, to make sure I waste not. Guess it’s that time to index my pantry, too…
With the preliminary equations out of the way, I still need some kind of method to keep track of my spending, as well as doling out that $5 every day. The dailyAllowance will have to be balanced between cash and my imaginary, online money (because most of it will come from my checking account). So I’ll need a way to keep track of how much cash to take back out of my wallet if I spend the currently available money with a swipe of my card.
I wrote out my calculations on an Excel spreadsheet with my guesstimations on how much money I would have. Then I wrote some math for when I overspend:
I wrote out my calculations on an Excel spreadsheet with my guesstimations on how much money I would have. I wrote some math for when I overspend:
if amountSpent > currentBalancenegativeCurrentBalance = currentBalance — amountSpentABS(negativeCurrentBalance) // absolute value! remember this?!bonusPool — absoluteValuecurrentBalance == 0
Anyway, I felt like my spreadsheet was basically ready. So I began amassing all available sums of money to plug into my equations and see how I would fare for the next four months.
Between cash and checking, I had nearly $575. $85 of that was birthday money, and went straight into my bonusPool, leaving my allowancePool with only $488, or $4.25/day. Hm. If only I could have $87 more, I would reach my target of $5/day. Then I realized: I have to live on this for four months, after which I should get a job I enjoy where I’ll be making money again. So why not take just a little more out from my savings? I had enough (I had honestly expected to take at least $200 out), and I only needed an additional $115 for $6/day. So that’s just what I did: I took an even $250 from my savings, providing me not only with enough for a $6 dailyAllowance, but a decent allowanceRemainder as well!
Anyway, I felt like my spreadsheet was just about ready. So I began amassing all available sums of money to plug into my equations and see how I would fare for the next four months.
Well.
After a quick and messy tracking system of the allowance I receive and the money I spend — separated into two columns for cash and checking — and a little over a week of living with this allowance, I’ve learned a few things:
- Cash is great! It’s so satisfying to see the whole pile I’m pulling my allowance from — it provides me the nice illusion of being rich! Keeping track of cash, however, is hard. I’ve already misplaced $4 somehow (it’s only been ten days…), and coins complicate things a lot because I like to just throw them into a jar and forget about them until I can roll them up and cash them in. It’s disconcertingly easy to forget to account for them. Checking, at least, is easy to track because of receipts and online statements. Balancing the dailyAllowance based off of conjecture about whether you’ll spend more with cash or your card each week? Much harder. I’m expecting a lot of “internal transfers” in my allowanceTracker to keep the balance..
- Even though I shouldn’t (and hopefully won’t) have to go for so long between paychecks again, living on a budget is kind of cool. It’s a great skill to practice, considering money management is so vital. It’s a way to straighten out your finances when you need to put aside a lot of money for something big (like school, or a vacation, or wedding season), especially if you normally don’t track your spending. A strict budget definitely makes you more aware of every time you take out your credit card.
- Cash is great! It’s so satisfying to see a wad of it that you’re drawing from. Keeping track of cash, however, is hard. I’ve already misplaced $4 somehow, and coins complicate things a lot because I like to just throw them into a jar and forget about them until I can roll them up and cash them in. It’s disconcertingly easy to lose track of them. Checking, at least, is easy to track because of receipts and online statements. Balancing the dailyAllowance based off of conjecture about whether you’ll spend more with cash or your card each week? Much harder. I’m expecting a lot of “internal transfers” in my allowanceTracker.
Next time, however, I’m going to make this an app. It’ll be far more efficient, and hey — that’s the entire reason I’m budgeting in the first place! What better way than to make all of this effort worth it?
Perfect.
