By this point, I had several months’ worth of expenses recorded in my simple spreadsheet. I sat down one weekend and read through it all, sketching out general categories. Despite all of the reading I’d done online, I ended up with a budget that was entirely my own. A budget is a very personal thing and even the categories that you choose help you figure out where you’re spending more than you want and where you want to spend more (often savings and retirement, but it might also include hobbies).
In my case, I ended up with: fast food, groceries, entertainment, car insurance, gas, miscellaneous, restaurants, rent, snacks, vacation, cell phone, utilities, and gifts. As I focused on problem areas (like my car) and brought them under control, I merged them with other categories. I also added some categories for saving and modified some categories for joint spending with me and my fiancé. Right now, my budget has: joint expenses (rent, utilities, groceries, dates, etc), fast food, snacks, miscellaneous, entertainment, insurance, cell phone, and savings. My budget is a living document and I change it as my goals and living situations change.
At first, my budget was literally just set up to mirror my average costs. It was descriptive rather than prescriptive, which let me keep the illusion that it wasn’t really a budget at all. Of course, by trying to keep my costs at or below their average, I was still managing to reduce my expenses.
In the end, I was comfortable with the idea of creating a prescriptive budget. For example, I reduced my fast food budget (with a smaller increase in groceries) because I was unhappy with how much I was eating out.
I have to admit that I haven’t yet managed to meet my goal for fast food (although I have high hopes for this month!). However, every month I’ve managed to reduce my fast food expenses. This has incidentally decreased some of my other expenses too. I use less gas (I’ve gone a week at a time without driving on occasion), I’m less likely to splurge on dessert, and I don’t buy random junk that I see while I’m at the stores near the fast food places. I have literally gone from eating out every day to eating out twice a week (and eating less those two times).
The rest of my process was relatively painless. Some research, a little persistence, and things worked out. Seriously changing my habits has been much harder, but worthwhile. Realizing that I have a goal helps me put these things in perspective. Sure, I’d like a burger right now, but I could also spend that money on setting up a cheap lightbox for my photography (or, more abstract, set it aside for the future). Even though I haven’t quite reduced my fast food spending enough to reach my goal, I’ve gotten closer and closer every month. And every month, it’s become easier and easier to get closer still.
Previous posts in this series:
How I learned to love my budget (part I)
Lattes are expensive, but cell phones are worse (part II)