Budgeting helps you find money where there was none

Published first on read.cash

So, as far as I know, everybody’s first instinct when it comes to trying to accrue wealth tends to be “How do I make more money?”.

I know it is my first instinct, even though I have been thinking about and reading and watching finance stuff for a couple of years, now, and all of the competent resources tend to tell you that making more is not necessarily a solution to one’s current money woes.

And yet, it still is my first instinct. I want to achieve X or Y goal and I need money for it, my mind scrambles in order to find some new avenue through which I can increase my income. The problem is that, short of scams or a lucky draw of the lottery or a very timely sell of stocks or crypto assets or a sudden inheritance, there are not many ways in which one can increase their income on a whim.

Just like most things that are worth it, achieving a sense of financial security (or awesome wealth, if that is your goal), take a ridiculous amount of time. Especially if you are not born into money or have an incredibly keen sense of accounting or business.

Being frugal is a suggestion that comes often, and sometimes uttered by people who either act condescending towards you or don’t know your situation, or both. Frugality is nice and all, and there is something to be said about how good thrifting is both for your wallet and the environment; but I have found frugality will get you nowhere without budgeting.

As the title of this short blog post that I am writing on a bit of a whim states, budgeting will help you find money where there was none. It is true. But not because this will magically make every paycheque bigger, but rather because it will help you know exactly where every single cent from that paycheque goes.

I’m not kidding. Ideally, you should know what your money is being spent on. Whether you correct some spending habits or not is up to you, but knowing is the first step and one of the most important ones if your goal is to be somewhat financially free in the future.

It’s like the basis of your strategy: First you know what (or how much) you’re working with, then you allocate it and you make sure that you stay within budget, and then growth stems from there. Obviously this budgeting has to work in favor of and alongside other things, like paying-off debt, investing and saving, in order to work appropriately, but let’s start simple.

I have budgeted in two different ways before: in percentages and in amounts. Percentages tends to work better during very predictable timeframes and for more general purposes, whereas amounts are a tad more adaptable and fluid. At least this is what I have found in my particular case; if it works differently for you, that’s great. I haven’t tried a mixture of both yet, but I am sure that that is a thing that could work.

Bear in mind that I am not a financial advisor, nor do I have all the answers and I am as much in this journey as the next person is, but I thought I’d share this because, even if it hasn’t fixed all of my problems, it has definitely helped. Also, I am aware that a big part of this post comes from a somewhat privileged position (ie. I have a steady job and have had one for several years now), but I hope that whatever your situation is, this helps in some way. 🙂

Budgeting 101

First we need to know what our monthly expenses are. In my hypothetical situation, these are the monthly expenses I deal with every month:

  • $50 for rent
  • $10 for groceries
  • $7 for utilities
  • $7 for pet food

And my paycheque every two weeks is $100 dollars. So for monthly expenses, I spend roughly $74 out of $200 in an average month, and that leaves me $126 to spend on whatever I please, right? That’s how it works.

Eh, no, not really.

That $136 should be assigned to something from the beginning. Like paying off debt, or saving for retirement, or for a new something, or to put towards investments, but it should not just be left to be spent all willy-nilly with no purpose at all.

So we have two paycheques then. If we budget with percentages, the distribution could look like this.

Paycheque 1

  • 50% for rent
  • 5% for groceries
  • 7% for utilities
  • 3.5% for pet food
  • 30% for Credit Card payment
  • 8.5% for Rainy Day

Paycheque 2

  • 5% for groceries
  • 3.5% for pet food
  • 50% for Investments
  • 31.5% for Credit Card payment
  • 10% for new thingy that I want

Since we are working with very small hypothetical sums, these percentages would work also as amounts. As I mentioned before, I find that using percentages work really well especially in the middle of the year, or in seasons where there’s no unexpected expenses (that you can think of) or special occasions.

I would recommend always having a Rainy Day fund and either some stocks (or crypto assets) or an investment account (or all of those) so that your money can make money for you. But that’s outside the scope of this.

I don’t think you need any fancy app or software to budget. Personally I have found that libreoffice or a notebook work wonders. I have been using the BulletJournal method for a couple of years now and at the start of each month I break down my future paycheques. It’s incredible how much it helps.

One strategy I have found that helps me a lot is to keep, for example, a separate savings account for rent, and to put slightly more money in there than my monthly rent amount. Say I pay the $50 in rent every month, but instead I put $55 in that account, and I spend less money in some other area. This will grow your savings without you necessarily thinking of it, and it doesn’t hurt since you already budgeted for it.

Also I have to emphasize how important it is to prioritize paying off debt ASAP. Budget for it. You can save and pay off a credit card at the same time, it’s not impossible, but the focus has to be on the not-owing-money part of it. If you owe money, and that debt is just generating interest, you’re just digging a bigger hole for yourself. But if you just funnel money into your debt, you don’t really feel like you’re getting ahead in life.

I would recommend budgeting an amount every month and applying the 80/20 rule to it in order to pay off debt and growing some savings: 80% of that amount goes to debt and 20% goes to savings. Once the debt starts decreasing enough that you can breathe again, you can even flip the amount and watch your savings grow, until the debt is payed off and you can focus 100% of that amount to savings only.

What if you don’t have a fixed income?

Well, that should be addressed the same way: allocate every dollar, euro or peso every time you get payed. Give it a job. In time the money you get from these freelance jobs or what-have-you should start to feel like a paycheque.

As with most things, the hardest thing to do is to begin. If you’re anything like me, once you have numbers going on in your head, you’ll find it hard to stop. Every dollar will need to have a purpose, and there’s no reason why that purpose shouldn’t be “eating take-out” or “a new game”.

Just remember that before you burden yourself with more work or before you fall for a fast-money-making scheme, sometimes rearranging wat you already make could start solving your problems and taking you in a direction you’d like.

Thanks for reading.

SV13, DD17, presencia en más redes sociales y semana de “descanso”

Se nota que he andado completamente desconectado. No he usado la computadora tanto porque estoy intentando recuperarme de la RSI (“Herida por estrés repetitivo”, por sus siglas en inglés) que me provoqué en la muñeca por andar duro y dale y no descansar ni ejercitar ni estirarme lo suficiente.

Da un poco de miedo pensar que este tipo de heridas puede ponderse tan mal que es posible que uno necesite cirugía; pero yo no estoy ahí aún y haré un esfuerzo más presente de cuidarme.

En fin.

En primer lugar tenemos que no actualicé el blog ayer, y hubo un nuevo sábado variado:

Y me intenté dibujar. ¡Es un auto retrato! También en Odysee.

También hubo nuevo Dominical hoy, más figura humana:

(También en Odysee)

Y, pues, como sigo con dolor de muñeca, esta semana que viene no habrá videos. Ya tendré suficiente con el estrés físico de la chamba del día normal, así que intentaré seguir descansando y no jorobarme más los tejidos. Chale. Subiré un video al respecto durante la semana.

En otras noticias…

Y antes de que la molestia en la muñeca me impida seguir escribiendo, he creado perfiles en una serie de plataformas sociales nuevas.

  • Publish0x: Es una plataforma de blog en la que uno es recompensado con tokens crypto (ETH, FARM y AMPL) por escribir y leer artículos. Hay de todo, pero la temática general es blockchain, proyectos de criptomonedas y así. Yo voy a estar subiendo artículos directamente de este blog, así que si prefieren leerme allá o acá, el contenido será el mismo.
  • Read.cash: Similar a Publish0x, uno es recompensado con BCH por leer y escribir. De igual manera estaré subiendo entradas de este blog. Read y Publish0x son mecanismos para expandir mi alcance, principalmente. 🙂
  • den.social: Es muy parecido a reddit, pero con el twist del crypto. Los usuarios son recompensados con un token interno, NRG, que permite votación y publicación de entradas; y con MTR, que es intercambiable por fiat pero también incrementa la cantidad de NRG generada. El contenido de calidad es recompensado con NRG y entre más contenido de calidad suba uno, más MTR puede generar. Estaré subiendo imágenes, compartiendo mis videos, y entradas.
  • Noise.cash: De los creadores de read.cash; Noise es una plataforma parecida a twitter que cada hora o así te regala centavos de dólar gringo que puedes dar como propina a otros usuarios, y un porcentaje de esa propina te toca a ti también. Las propinas son dadas en BCH, entonces es necesario tener una cartera digital. Al ser como twitter la trataré similar, e iré subiendo imágenes y ligas a mis videos y entradas. 🙂

Ligas a mis perfiles en estas plataformas ya están en la sección de Links.

Gracias por estar y por leer.