Wednesday, August 21, 2013

Budgeting Like An Engineer

So here’s a pet peeve of mine: Cash. 

I could guarantee that those same people who complain about the traffic on the way home from work are the one’s holding up the line at the grocery store while they trade paper and metal with the cashier. Those same folks telling their kids not to play in the dirt are the ones who insist on stashing a collection of strangers’ germs in their purses and wallets. Hypocrites! Right? They’re right up there with the kid who raises his hand at the end of class when the professor asks “Any questions?”… or those terribly ignorant people who squeeze the tube of toothpaste at the middle…

Cash is no longer a convenient form of currency. It is outdated, obsolete, and does not offer the many benefits that credit cards do. It doesn’t build your credit score, it doesn’t offer kick back money and offers, and above all, it annoys me.

That all being said, this page is not about my pet peeves and there are tips and pointers I wanted to share so here’s my segway:Many people use the excuse that only ever using cash is the simplest way to maintain a weekly budget. Though this is absolutely true I believe that this is more of an excuse to be the laziest budgeter possible. The concept of budgeting is about managing and proportioning your money. It is about understand what is going where and in what amounts. Here’s my big point - budgeting takes place before spending, not during! If your idea of budgeting is slipping X amount of dollars in your wallet at the beginning of the week and hoping you make it through, you’re going about it all wrong. Understand how much it costs to survive, and how much above surviving you prefer to live. $Surviving + $Living = Budget!

Here’s the second important point that seems obvious but must be distinguished as an entity outside of but along side your budget: Self control, though not a budget itself, determines the effectivity of your budgeting endeavors. Nothing more to say about this, as it should be quite obvious.

So here is what I’ve been doing while in Australia that might help you to 1- budget, and 2- break your addiction to (crack) cash. First thing I did when I got here was open a bank account with debit card capabilities (that describes pretty much any bank account). I decided not to apply for a credit card while over here, which may be foolish of me or not but whatever. I used it everywhere that I made a transaction and gathered receipts for each. These can be a bit annoying to deal with but not half as annoying or dirty as cash. More importantly, within three weeks I had a detailed breakdown of all of my spendings, which I then split up into necessities and everything else. I took an average of the necessary items over the three weeks and then see how much of the rest I can afford to keep. For me, in case you’re interested, I’ve found myself to be budgeting comfortably at $50/week. That’s with Melbourne grocery prices (ouch).

Now, here’s a kind of cool feature of the debit card that I’ve been using since I established my budget. Every Monday morning, I go online to my banking account and see how much of my budget remains. If it’s more than nothing, great! Fill it back up to $50 and that extra money might send me on a last minute trip to somewhere along the coast once courses are finished and before I head back home.



Here are some pictures I took around Port Melbourne on Sunday. Though it's winter here, Melbourne offers all 4 seasons in one day.

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