It’s really difficult when you’re dealing with a variable income to plan for how much money you’re going to have in a given month. Spending categories change all the time depending on how much money you have, and what the demands of the month are.
This is a great first step. Don’t worry about the big picture, just make sure that every dollar that comes in has a job.
In order to do this, you have to have an idea of what your expenses are (That’s where the money tracking comes in). It can start out pretty basic, but as you go along the more specific it gets the more fun it gets (yes, I said fun)
- Rent
- Groceries
- Restaurants
- Phone
- Movies
So whenever a cheque comes in, it gets assigned to one of those categories.
The problem is that account balances lie. When I started to make money, I looked at my account balances and saw that I was flush with cash.” Of course I can go out for beers”. “Yes, I will take that sweater.” “Please borrow some money.” And all of a sudden I couldn’t pay my phone bill until that next cheque came in.
Money works better if it has a specific job.
It takes awhile to figure out where it’s needed, but just the simple act of being more engaged in your spending habits will start bringing up the question
“Is this something I want? Or just something that I’m buying out of habit”
How you’ll feel after living the ‘Rule 1’ life:
Knowledge that your money is going exactly where YOU WANT IT TO GO. Which means that you’re making the best use out of every dollar that’s coming in.
Also…. a fun bonus… GUILT FREE SPENDING. Once that money has that job, I don’t feel bad about spending it there. If I budget 50 dollars for movies I don’t have to bashfully slink into the theatre suspecting I’m spending my rent money on the latest Polly Shore flick. This is my movie money!!! Time to have fun.
LEARN MORE ABOUT YNAB: THE BUDGET HERO EVERY ARTIST DESERVES
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