Budgeting Bean: Tuesday's Tip #30

Bean has got a budget! For the first time in her life. Can you believe that? With a debt-proofing-Mary-Hunt touting mother, how did I manage to get to the age of 26 without ever having a budget?! Sheer laziness I suppose. With tuition to pay and a car to upkeep, I've never been one to overspend. After I graduated and got a job, I worked hard to pay off my student loans as quickly as possible. Then it was save, save, save baby! AND buy a reliable, new-to-me car :). But now that I have a comfortable paycheck rolling in every two weeks, it's become easy to forget what it was like to not have money for little extras, and I've found myself spending an excess of money on miscellaneous things here and there without batting an eyelash. 

It was time for change. SO, a few weeks ago my eldest and wisest ;) brother sat down with me and explained the world of RSPs, TFSAs, GICs, investments, blah blah blah. I really have no interest or knowledge in this kind of stuff so it was really great to have him break it down for me in layman's terms. I am now set up with a Tax Free Savings Account and Guaranteed Investment Certificate account.  I'm planning to break down my savings into different categories (car fund, emergency fund, vacation fund, house fund etc) and I've started to utilize the pay-with-cash "envelope" system that Dave Ramsey introduced. Basically I've set a dollar value of how much money I can spend each month on day to day things besides my set tithing amount and other necessary expenses (car insurance, cell phone bill, rent etc). I'll take that money out in cash each month and divide it into the following four categories (each person or household can personalize their categories as needed of course): 1. clothing, 2. miscellaneous/daily living, 3. entertainment, 4. gifts. Now the hard part comes! Example: if I run out of clothing money by the middle of the month, I'll have to wait until next month to buy that oh-so-cute top! Of course I can be flexible, and I'm just in the beginning stages. I'm sure I'll be adjusting and re-adjusting my budget many times before I come up with something that's realistic and practical. 

As my sister Doreen said, the nice thing about having a budget is that you now don't have to feel guilty about spending money on things that might seem superfluous to others or your spouse. If you want, you can spend your monthly clothing allowance on several new outfits from Walmart, OR you can save up for a couple months and spend it on a really nice one-of-a-kind, good quality dress! Or for example you might have a furniture fund. If your income is average or below average, you might be fine with owning a cheap furniture set and never even dream of owning a real leather couch (and that's totally fine!). BUT, if you set aside money each month specifically for furniture, in a few years you can buy that bed or couch you've always secretly wanted and not feel guilty! 

I took some pictures of my envelope system. All I did was glue a piece of labelled cardstock paper to four envelopes and staple the bottoms together. Voila! (Oh and by they way, if you are interested in one for yourself, I'll make you a personalized envelope system for the low price of $5! Hurry, this offer won't last!)