Monday, February 4, 2013

Resolutions and Money

In my previous Happiness Project I dedicated a month to money, worked out a rough budget and collected all my receipts for a couple months.  I found money month to be one of the most eye-opening.  I had a better idea of where I was spending my money and I kind of left it at that.
So, enough time has passed and my money focus has changed a bit and I thought it was time to try it again.  I recently used Mint to create a budget for myself and I think it’s fabulous.  It's a program that takes your banking information, allows you to categorize your purchases and then uses the information to help you create a budget.

For example, I eat total garbage for lunch.  So I categorized all of the receipts for lunches under fast food.  In my head I had a number of what I thought I spent on lunches, turns out I was spending more.  Going out for dinner I categorized as restaurants.  I only went out a few times with Flash, but dinner for two costs a lot more than lunch for one and I was shocked at how much I had spent on meals.  I also bought groceries in addition to that.  I should be the size of a house given how much I spend on food.
The program also allows you to budget for future expenses, such as travel or car maintenance, allotting a certain amount of money each month towards something you need six months down the road.  In theory I could do this all in a spreadsheet, but to track my spending properly I would need every receipt for every purchase.  A lot of times I forget to ask for a receipt for small purchases, or I’ll do a great job of collecting them but by the end of the month I don’t feel like going through them all and adding them up.  The other thing is Mint makes note of all charges on your accounts, your credit card, etc.  I’ve never factored account fees into my budget before.  With Mint it’s immediate, I make a purchase, Mint categorizes it (I can modify the category if needed) and it automatically starts filling up the budget.  If I spend with cash, I can go in and add a transaction manually. 

Instead of spending all month and then adding my receipts up at the end of the month to see if I went over, I can go on my phone app during the month to see how much of my clothing budget I’ve already spent to prevent myself from overspending.  It’s this great visual chart and I think it’s going to help me a lot.
The other thing I found interesting is how something like a budget can be a catalyst for new resolutions.  As I budgeted for my current and future expenses I found I needed to cut back on certain areas if I wanted to save what I needed to.  You have to take a long hard look at your lifestyle.  I get bored of salads and sandwiches and like a hot lunch so I often resort to buying fast food.  In the past I tried making my lunch with the goal of eating better and got bored of it.  Now I know that I have about half as much money to spend on lunches as before, so I need to make a lunch at least 50% of the time or I’ll run out of money.  To me that is far more motivating.