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Last year was expensive. In May, I received my bachelor’s degree. In August, I moved 2,000 miles across the country to start a graduate program. In October, I got married, in a wedding my wife and I financed ourselves.
Between the chaos of simultaneously getting acquainted with a new city, beginning my graduate career (where I also began teaching for the first time in my life), and putting together a wedding we’d been planning for the last 18 months, I no longer felt like the financially savvy person I’d once been. Our money was flying out the window. Whatever budgets we’d created before were no longer as relevant with all our lifestyle changes, and they were now being completely ignored each time we made a purchase.
Something had to be done. I decided to start tracking our expenses, one by one — not for the sake of ensuring they didn’t exceed some arbitrary number we’d set in our old life, but just to know exactly where our money was going. In an Excel spreadsheet, I organized our entire lives into 17 categories, made a note of each transaction, and instructed the spreadsheet to automatically organize the data into easily graspable pie graphs and bar charts.
And it worked like a charm. At once, I could tell exactly how our cost of living had changed by moving to a new place, what sectors of our lives were most costly, and where we could afford to cut back.
If you really want to get your spending habits under control, don’t force yourself into unnatural, arbitrary rules.
The spreadsheet led to several discoveries. For one thing, despite how much we love cooking together and eating in, we were spending more than $150 per month on non-grocery food and drinks, a number we’ve since cut in half. We also found that all of our under-$25 expenditures in a given month totaled nearly $500. (While you think those $5 Starbucks drinks and $10 Target runs aren’t a big deal, they might add up to more than you realize.)
After a few months of tracking and trimming down, I created a new budget — though that’s a word I hesitate to use because, as my wife and I discovered, most budgets don’t work.
Hard and fast budgets don’t allow for the complexities of human life, the nuances of our spending habits, or changing market factors. Plus, they’re often calibrated to our lowest common denominators, so any month with an unusual circumstance that requires us to spend just a little bit more (and let’s be honest, every month has one of those) breaks the budget and makes us feel like failures.
Eventually, after “failing” to stick to our pre-set budget so many times, we give up altogether. The better alternative, we found, is to track your spending, then use your tracking spreadsheet to help you figure out how to spend less. (You can use this sample spreadsheet to get you started.) After you’ve given yourself a few months to readjust and stabilize your spending, I suggest creating a new budget based on your newly-formed habits.
With this system, your budget doesn’t necessarily oblige you to change your life; instead, it provides a benchmark to check yourself against each month. It’s not something you have to follow religiously (as I said before, things happen), but something to let you know how your spending in each category for a certain month compares to your average spending in that category over the previous few months. Having an above-average month isn’t failure, just something to watch out for.
So if you really want to get your spending habits under control, don’t force yourself into unnatural, arbitrary rules. Just figure out exactly what your habits are, then change them in ways that are challenging but still conform to the flow of your life.