Lately, I've noticed a trend among my friends and many bloggers. We're all slightly obsessed with budgeting.
It started when my friend, Kim, posted a link to The Simple Mom about budgeting and getting out of debt. Then, some women from the fabulous Wellesley College held a workshop on budgeting and building wealth. Our alumnae network started a virtual group about finance, where I learned about some great blogs like Get Rich Slowly and Make Love, Not Debt. This was a whole new corner of the blogosphere for me, but everyone I knew seemed to be reading them or discovering them at the same time. My best friends and I would chat about Dave Ramsey and Roth IRAs while sipping coffee.
All of this new information and excitement about budgeting and managing money got me excited! It also helped me feel in control of my finances, even though I don't make very much money and have quite a large chunk of student debt.
Here are three of the biggest things I learned:
1. While you have debt, you are living in the past.
Debt is not good. This might be obvious to many of you, but we live in a culture where it is deemed ok, even encouraged, to rack up thousands in student loans, thousands in credit card debt, thousands in car loans, etc. There's this very deeply embedded idea that you should consume, regardless of whether or not you can actually afford it. Now, there are many who are completely opposed to debt or even to credit cards. I'm not one of them. I have credit cards and use them responsibly. I have student loans from graduate school, but to me they were worth it and I wouldn't trade my experience at grad school for anything. In my opinion, certain things might be worth debt, but that is up to the individual and everyone should think long and hard before accruing it. Because while you have debt, you are living in the past. A large portion of your income will be spent paying off something you've already done. I'm all grown up now (or at least pretend to be), but a huge portion of my income goes to student debt. I'd rather pay off my debt quickly and live in the present, where all of my money can be spent on things that I want to do right now or in the future. I don't want to have kids and not be able to go on vacation because I'm still paying for grad school or for a couch that I bought when we first moved in to our apartment in Atlanta. So I'm going to try and avoid accruing any new debt and pay more than the minimum payments required on my car and student loans in an attempt to pay them off as fast as possible (more on this to come).
2. Budgeting is fun! It doesn't restrict spending, it just means you think carefully about where you choose to spend it.
I think I used to hate the idea of a budget because I thought it meant that I couldn't buy anything, that I couldn't have any fun, and that I would never get to buy new clothes or eat out again. But that isn't true. The bottom line is that I only have so much money coming in every month, and it is up to me to think carefully about how I want to spend it. Do I want to pay off debt? Do I want to go shopping? Do I want to go on vacation? Making a budget just means you thought about this and are putting your money where you want it to be going (e.g. to a vacation fund, not Starbucks). Since I can be somewhat of a control freak, I find it lots of fun to sit down at the beginning of the month and plan out where I want my money going.
3. Sometimes you have to go without.
This also might seem like I'm stating the obvious. But part of managing your money and budgeting is realizing that in order to have more money for the things you need or want to spend it on you might have to give something up. This means thinking carefully about what you're spending your money on and not just uncritically "buying into" the idea that you need certain things (I couldn't help myself!). Do you really need cable? Do you need to eat out? Do you need to go out for drinks instead of staying in? There are often lots of things in a budget that you might feel like you "need" but actually don't. By cutting those out, you free up money for other things.
I'll be back soon to share a few more thoughts on budgeting, such as why I think budgeting is all the rage these day (especially among women).
P.S. If you're not already using mint.com to budget and track your spending, you should be!