It’s Called Currency

Now that you’ve had plenty of time* to consider parts 1 through 4, let’s do a wrap-up of the basics for budgeting.

As the tagline of this site says, “manage the flow and you’ll be able to weather any storm.” Budgeting is the primary tool for managing the flow of money in your life. In Part 1, we saw where the money is flowing in (your income). In Part 2, we looked at where it was flowing away (your expenses).  Part 3 was the opportunity to create and /or examine any holding ponds (savings) and Part 4 was where you purposely diverted the flow in order to create growth elsewhere (giving). Know that money will flow through your life whether you’re managing it or not. However, taking the time to plan where the flow goes results in you holding onto more of it and having it be there where you need it.

My budgeting routine has allowed me to easily handle some curve balls that have hit recently. When I started having headaches from too much stress at work, I was able to fund a weekly massage that really was a medical necessity but my health insurance wouldn’t cover it. I was able to purchase a new bed when I started having back/sciatic nerve problems from the too soft hand-me-down mattress I’d been sleeping on. I was able to cover the necessary veterinary expenses when one of my cats unexpectedly turned up with a small tumor on her belly. (Medical procedures for cats and dogs can cost like humans these days, let me tell you!) I have been able to accommodate the recent increase in grocery prices and the fluctuations in gas prices without worrying where the money will come from. And I can honestly tell you, before I started budgeting on a regular basis, I would have never had the money set aside to handle these issues. I might have saved up a little bit, but it would have gone to some frivolous expense rather than being there for me when I really needed it.

Taking the time to review my budget weekly (or every other week) keeps me focused on what’s important. I’ve got a bit set aside for car repairs, so if something goes wrong, I won’t have to dig into my emergency fund. I set aside 1/12th of the annual life insurance expense each month, and when the month comes to cut the check, the money is there. I set aside money each month in a savings account for Christmas so we won’t be scrambling to fund those large end-of-year purchases.  If there’s money left over at the end of the month, I review my budget again and allocate funds for future expenses (like doctor bills or car repairs) or use them to build my emergency fund.

The most important thing to learn about budgeting when you’re starting out is that it is not a set-and-forget operation. It is a way of watching your money flow, a way of guiding that flow through today and ensuring what you need will be there tomorrow. Allocating numbers to categories on the first of the month will not address the leaks that show up on the 12th. Waiting until the 31st to review the numbers from the 1st is a sure -fire way to discourage yourself from ever doing a budget again. But looking at them on the 10th and seeing what adjustments need to be made, then doing it again on the 20th…that will lead to a feeling of control over your money. Maybe a feeling you’ve never had before. And that kind of peace of mind? It can’t be bought, no matter the price.

*My apologies for the long pause in posting. The first half of 2009 was extremely trying/draining. The company I work for downsized my department, but I survived the cut. As one of the still-gainfully-employed, I’ve been “blessed” with a greatly expanded workload. The emotional toll of losing so many co-workers has been hard to get past, but I’m working on it. My sympathies go out to anyone who has been through similar trials this year, whether they were cut or not. Each side of the axe has its own trials.

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