Budgeting With No Income

Save, save, save! That's the advice I hear from everyone and I'm sure you have too. That and cut out the daily latte and save a bajillion dollars a year! But what if you've already cut out Starbucks or lactose intolerance has managed to save the bajillion dollars for you? Where's my money? Unfortunately its a complicated problem and one that's unique to each individual. I won't tell you to cut out coffee or anything else specific because the reality is that "latte" can come in many shapes and sizes. Maybe you like to collect bobble-heads or shoes seem to wear out quicker under your feet than the average person. Whatever it is, the specific places we spend money are irrelevant compared to the reasons why we prioritize some expenses over others.

Other than save money, I hear "budget" more than anything else from money-smart people I trust. If that word makes you cringe like hearing "moist" or "The Patriots won the super bowl again", unfortunately it probably means you really need to create one. Budgeting shouldn't be a bad thing or feel like homework. I'm not going to lie though, getting started is tough. Once you do get going though it should make you feel empowered. A budget will help you be in command of the resources at your disposal and shift the way you think about money. Budgets are not only necessary for good financial decision making, but they truly serve as a roadmap for what you can do in the future.

Carl needs his coffee.

The reason why I titled this post Budgeting With No Income isn't because it's a good exercise to practice with fake numbers but because I spent too many years avoiding a budget for want of consistent income. I'm a freelancer and my monthly income can fluctuate by 200% plus or minus from month to month! For far too long I failed to keep track of the money coming in and more importantly flowing out of my bank account. But when the money dries up you have to look at where it is going and hopefully this will serve as a recommendation to do so before a drought hits.

If you're like me you might think of a budget the same way you think of a diet. If you need to "go on a diet" its because you have a problem with your weight, right? As if it's a solution to a problem instead of being a tool that helps you achieve your goals. But in recent years we've slowly changed the way we think of dieting to include our regular intake of calories compared to the exercise necessary to keep in shape. By this logic everyone should be dieting and the stigma associated should be thrown in the trash along with the miracle powders and fat-burning torture devices from late night infomercials.

Budget like you Diet. As if your life depends on it.

So if diet is no longer a bad word because we're all doing it, budgeting should be seen the same way. If you don't create a budget, your impulses will do it for you and that's a terrible way to build wealth. Just as eating fast food every day or spending all of your time on the couch will yield adverse results, so does allowing commercials and impulse buying to create your budget. So where do you start if you haven't done this before? Start simple with the biggest monthly expenses and add as you notice where your money goes.

You probably already have a basic budget in your head right now. I'm guessing it looks something like, Rent/Mortgage Payment $X. Yep, that's a budget. It may only have one line but I'm sure you consider this number every time you try to decide if you can afford that new iPhone or another round at the bar. Start by putting down the biggest expenses that you make on a monthly basis and allow your budget to grow from there. When I began I put it down on a white board where I could see it often and be reminded how much I needed to make ends meet. Naturally I continued to include as many places that I needed to spend regular money and bang, I had a budget indifferent to the amount of money I was making that helped me decide if I was having a good month or a bad one!

I challenge you to do the same this month and if it helps to plug the numbers into a spreadsheet there are tools available online for free like Google Sheets to help you plug in all of your monthly expenses and funnel them into one big number to show where your money goes. Remember, budget isn't a bad word and it doesn't mean you're failing at life. In fact its a word that should empower you and help you see where all of those resources are going every month.