While it’s far more tempting to avoid a budget when expenses are high and income is low, this is when you need it the most. I make a good wage, live in a city, and have reduced wages due to health issues. My greatest stress was when I was getting a diagnosis and learning that there was no quick fix, maybe no fix, to my health issues.
Healthcare costs are crazy and time-consuming and many times per month I have to decide if the loss of income is worth the chance of actual improvement. Do I miss work to see a doctor? I have to miss work to get prescriptions filled. I have to miss work to go to a health appointment to qualify for cheaper insurance. The losses are numerous.
Additionally, specialists live far away. For the Mast Cell disorder, I can’t even be treated because the nearest specialist is an 18+ hour drive. I lose an extra hour to travel to my neurologist. Could I find ones closer, sure, but this one hasn’t given up on me yet.
I wanted a quick fix too. There should be an app that knows what I want and knows how I prioritize my money and do it magically for me, but the truth is that there isn’t an app that will take the work away. At least not completely.
When Life Hits:
So after years of budgeting my way out of financial panic, I had a shit mental health year and fell six months behind on my budget just before going on a week-long vacation. Since I’ve been budgeting so long, I don’t worry so much about falling behind on a normal month. My goal is to catch up every other week, preferably just after payday.
Falling behind before a strange spending event is dangerous and I did it. I found myself at a craft fair, which I love, and spending several hundred dollars. I enjoy spending money as well but I’m a minimalist and don’t want a bunch of buyer’s remorse. No one does, right?
There are two parts to avoiding buyer’s remorse. The first is doing my budget. This includes yearly expenses, monthly expenses, and building up what Dave Ramsey calls sinking-funds. This is money that you save for a specific expense. Sinking funds are the key to my past budgeting failures.
This may sound crazy to some of you, but last year I had discovered that I had thousands of dollars unallocated. Which means this money should not have been there. I scratched my head and reviewed my records and couldn’t for the life of me figure out where that money was supposed to have gone. Eventually, I gave up and decided to consider it savings.
What Unallocated Money Means:
At the beginning of 2021, I received a notice that my property taxes were in default and that my debt would be publicly published in a week or two. WHAT?! I remembered going to the site. I remembered looking at the balance and even clicking the Pay Now button. So I dug through all my records for any sign that a payment had been made. I looked at all the expense accounts for the entire six-month period that I may have paid them. Not only was I one year late paying but I was two years late paying. I had misread the due date for the full term payment!
None of my records showed any evidence of transactions that size going out to the city. Nothing! I’d been budgeting for it since I signed the purchase agreement for the house. For two years. Suddenly, that unallocated money made sense.
Saving without Purpose:
While I was using my budget, I wasn’t specifying which portion of my savings was for each purpose. If you weren’t aware, many banks will let you open an account for each fund. It’s a lot of paperwork but can be done relatively easily.
For me though, I just needed a way to track it in my budget. I’ve tried a few methods. Initially, I was only tracking project funds that way. Such as foundation repair or a water heater replacement. Now I’ve discovered that I even need to track the money I put aside each month to pay for my Amazon Prime membership.
Could I get by without tracking and budgeting? Sure. For a while. I do have some generic goals of “saving 15% of my income” and “giving 10%”. However, the issue that arises with generically saving is that we might spend the savings prematurely or not invest properly.
For me, the money that I am designating as “Savings” is not to be used for sinking funds. Its entire purpose is to grow a bulk for investing. I am in the process of determining what the specific investment will be but it’s not home improvements and it’s not to be spent investing in myself. I do that in other categories. This “savings” is long-term.
Deciding what we want our money to do for us is important. Almost, but not quite, as important as saving it in the first place.
Quality of Life Categories:
Along the same line, I find it important to define what it means to have “quality of life”. Here’s where this idea came from. With chronic health issues, there is an endless supply of products for sale that proclaim they will improve your health. Sadly, this includes doctors and medications. There is a limit to our money though. I was forced to define what a quality life would mean for me and my definition doesn’t even include feeling good every day, so consider that for a moment.
Having this definition, though it should be reevaluated periodically, helps prioritize money as well. I budget a very large portion of money toward Pilates because it has helped me feel as close to normal as any doctor ever has. It’s worth it. To me. Every person has to define what a quality life is. We aren’t guaranteed to live long lives and you shouldn’t suffer just to build up money you can’t take with you. That’s my opinion on balancing current and future money.
Competence/Confidence Loop:
Money isn’t forever. Tomorrow your currency could be worth nothing. Is it likely? Depends where you live but if an apocalypse arose, your cash is not worth more than a chicken. I’m not trying to make anyone paranoid here. I swear.
We can be wise and cautious and we could still be hit by a natural disaster. Maybe you were insured for it. You were likely underinsured for it. You get the idea.
What is most important about budgeting is that you grow your own skills. You begin to be more creative. Challenge yourself. Perhaps you learn how to cut out costs. You can read about my Food expense budgeting challenge. Even better, you may learn how to increase your income. Even if you can’t sustain cutting the costs or increasing your income. You know you can do it when you need to.
That is where security really comes from. Confidence in your own Competence. You’ve got this!