A friend of mine asked me today what the word budgeting means to me. It used to be a rough estimate of how much I would spend over the following n months, so that I could put some money away into a term. Or how much money I figured I would spend until the next paycheque so I could save the rest. I figured out early on that if I had less money in my chequing account, then I would spend less money because it felt like I had less.
Interestingly, as I progressed through my co-op jobs and had to worry less about money, I decided that I should track what I was spending money on. I went back through my records and itemized this. I still feel that just because you have money, doesn’t mean you need to be spending it frivolously.
Now, I see budgeting more as a spending plan, partially based on past history. It’s not a life or death situation if the numbers aren’t exactly as estimated. Having a spending plan minimizes those large, out-of-the-blue purchases. Back in the summer, I decided that I want to have a desktop computer to complement my 2.5 year old laptop once I have settled somewhere a bit more permanently. Since I planned on making this purchase, I set aside the amount I felt was reasonable to spend on a new desktop computer and haven’t touched it since.
This method will also allow me to easily re-organize how much I plan on saving for particular future purchases based on the other anticipated monthly expenses. When you know how much you can save each month, it’s simple to calculate how quickly you will reach your overall goal.
But the main point is that I am in full understanding of how much I am spending and why beforehand and after. For example, during my most recent school term, I made a conscious decision prior to the term beginning to eat out if it made it easier and/or less stressful to complete my schoolwork, despite the cost. My spending plan was created with this decision in mind, so when I would see how much was being spent, I didn’t worry or guilt myself over it – I did do better in school and have more fun with friends because of that decision and that matters too.
This entry was posted in Articles and tagged budget, finances. Bookmark the
permalink. Both comments and trackbacks are currently closed.
What Budgeting Means
A friend of mine asked me today what the word budgeting means to me. It used to be a rough estimate of how much I would spend over the following n months, so that I could put some money away into a term. Or how much money I figured I would spend until the next paycheque so I could save the rest. I figured out early on that if I had less money in my chequing account, then I would spend less money because it felt like I had less.
Interestingly, as I progressed through my co-op jobs and had to worry less about money, I decided that I should track what I was spending money on. I went back through my records and itemized this. I still feel that just because you have money, doesn’t mean you need to be spending it frivolously.
Now, I see budgeting more as a spending plan, partially based on past history. It’s not a life or death situation if the numbers aren’t exactly as estimated. Having a spending plan minimizes those large, out-of-the-blue purchases. Back in the summer, I decided that I want to have a desktop computer to complement my 2.5 year old laptop once I have settled somewhere a bit more permanently. Since I planned on making this purchase, I set aside the amount I felt was reasonable to spend on a new desktop computer and haven’t touched it since.
This method will also allow me to easily re-organize how much I plan on saving for particular future purchases based on the other anticipated monthly expenses. When you know how much you can save each month, it’s simple to calculate how quickly you will reach your overall goal.
But the main point is that I am in full understanding of how much I am spending and why beforehand and after. For example, during my most recent school term, I made a conscious decision prior to the term beginning to eat out if it made it easier and/or less stressful to complete my schoolwork, despite the cost. My spending plan was created with this decision in mind, so when I would see how much was being spent, I didn’t worry or guilt myself over it – I did do better in school and have more fun with friends because of that decision and that matters too.