Know where your money is going
BY: PETER NJOROGE, CULTURE EDITOR
Fourth Estate/Billy Ferguson
Warning! There’s nothing mind-blowing about this week’s edition of More Money, Less Problems. In fact, the advice that I’m going to offer is quite simple — but definitely not easy.
Regardless of how much you make, there are two categories of people when it comes to finances: those who know where their dollars are going and those who don’t. Understanding where your money goes is one of the best tools that you can use to organize your life.
If you’re looking for the “sell everything except the clothing off your back and never leave your house” article, this will not be it. But it’s important to know where and why you spend your money.
To be honest, I will never be the person who budgets every single dollar and adheres to that budget like law (and honestly, I think most people aren’t). Until quite recently, I was awful at budgeting my money. But as you get a little bit older, you realize that not knowing where your money is going can be quite a negative thing.
This is where having a budget comes into play. Mint, a popular budgeting app run by Intuit, has made me much more accountable and responsible with my income.
Mint helps you track your purchases and budget your money in a secure and easy way. The app is very simple and you can really tailor the offerings to fit your needs. For example, I primarily use the app for budgeting purposes and to track my spending.
In the app, you can set clear boundaries for the amount that you want to spend in specific areas. These provide a space for you to be aware of your fixed costs and keep an eye out for all variables.
With real-time updates and a weekly notification asking you to review your purchases for the past seven days, the app makes sure to keep you in check and show you where your dollars are heading off to.
Shortcomings in your budget are pretty inevitable — and that’s OK. The important thing is to look and make sure that mistakes don’t happen again. Know where your shortcomings are. For me, I have to dedicate a portion of my income to purchasing products from the wine store that I work at. If I don’t drink different things in the store, I really won’t be able to do my job as well.
This poses a problem for me because I tend to justify my extracurricular purchases at the store by chalking it up to doing my job, which is often not the case. So, with Mint, I set a barrier of money that I can spend in a week at the store that makes sense for me.
Making your budget make sense is one of the toughest things about organizing your money. It really takes a good amount of time and effort to make a budget that works. And by “works” I mean one that you can consistently adhere to and doesn’t make you miserable. This takes brutal honesty and a lot of tweaking.
It also takes a fair amount of compromise from your end. Maybe buying that new shirt or pair of shoes means that you can’t shop certified organic for all of your groceries. If you want to see a concert every weekend, that’s something that you will probably need to adjust your budget for.
The important thing isn’t that your budget looks like everyone else’s. We all value different things and money is one of the biggest ways that we see our values manifest. What you spend money on is your prerogative. All that I would suggest is making sure you know where and why.
