Lately I’ve noticed a ton of references to spending plans as opposed to budgets to keep track of where money goes. Since the word “budget” apparently has negative connotations, thinking of it as a “spending plan” is supposed to make us feel better about the fact that we’re paying attention to our finances.
I won’t knock people who benefit from calling them spending plans, but for me personally, it just seems silly. I tried to picture myself sitting down and saying, “Okay, time to work on my spending plan for January!” Well, okay then. It’s not really any different in my brain. Either way, I’m looking at my income and expenses and figuring out how to make the best use of my money.
Because my income situation is a complete question mark for January (and all of 2012 at the moment), I’ll be reverting back to the Single Mom Budget – I’ll buy the food items we need, pay our bills, and then deal with what’s left. Since I’ve conquered many* of my spending demons already, I’m not worried about cutting back right now; I really just want to break even for the month without dipping into savings. (*As many of you know, I’m still smoking. Which is disgusting and expensive and I need to quit. But I haven’t gotten there yet.)
I have a pretty easy January budget. I need $650 to cover fixed expenses like utilities. $75 for gas each month. Around $300 for groceries. $110 for cigarettes (because I’m being realistic here). Overall, I need around $1135 in income to make it through the month without using any of my emergency savings. Luckily my bank stores and categorizes this information for me automatically, so I just look at my online banking to know where I stand.
This is a completely backward way of thinking compared to my previous budgets. Before, I knew exactly what my income would be and had to figure out how to disburse it. (This budgeting planner at Debt Advisory Centre gives you an idea of what I mean.) Now I only know what my expenses are and have to figure out how to earn the income to meet them. Interesting how it seems different but really isn’t. I’m still making the effort to figure out what I need to pay and in what order.
What if it was a Spending Plan?
Okay, let’s imagine that I’m calling it a spending plan. What would I do differently? Well, I’m pretty sure I would still have to know my expenses for the month – who I owe, what I owe, and when the payments are due. I would also have to figure out how to make the money to cover my expenses.
The only difference? I guess a spending plan is supposed to make me feel all empowered about the month of January, like Hooray! I made a plan and now I know what to do! But that’s the exact feeling I have when I budget. I’m taking control instead of just blindly spending money, and I get to sleep at night knowing I’m not going to pay any late fees or overdraft charges.
So What Do YOU Call It?
I know where people are coming from when they say they detest the word “budget.” If you watch old school TV shows, the families are all, “We can’t [insert really awesome activity, vacation, or purchase] this year. We’re on a budget.” And you get that vibe that they have done some REALLY BAD THINGS and now they’re paying for their sinful, overspending ways.
But really, I think that’s the mindset that gets so many people in trouble in the first place. Thinking that budgets are something you do after you’ve screwed up is the wrong way to make progress. Now, if you’ve already screwed up, it’s not a bad place to start. But if you’re sitting around going, “Meh, I’ll just spend money however I want. Then when I’m freaking out, I’ll make a budget to punish myself,” you’re doing it wrong.
Basically, it doesn’t matter what you call it as long as you do it. Whether it’s a budget, a spending plan, or an episode of Survivor: Dollar Edition, most people need a way to keep up with money. (Sidebar: How awesome would it be to withdraw your entire paycheck from the bank in $1 bills, give them names and personalities, and see who gets “voted off” to pay the electric bill and which dollar bill is left standing at the end of the month? Obviously I have no life.)
I want to know – how do you keep track of your money each month? What do you call it and why? And if you’re reading this site and STILL haven’t started dealing with your money, why not?