Title: My Personal Experience with Budgeting
Written by: Gavin S.
Earlier this year, my personal finance class discussed budgeting and how it is a versatile and effective financial tool. I heard about how budgeting not only allows you to save for the future but also spend in the present. However, I brushed this knowledge aside, because I believed that this information wasn’t applicable to me. My finances weren’t that big, I didn’t have a job, and I just didn’t really need to budget -- or more specifically, I just didn’t care enough to research one.
I like to think I have a good social life. On the weekends, I’m either with my girlfriend, with my friends, out to eat, or hanging out. All these things equate to spending money. And for someone with no job, this is a dangerous lifestyle. For at least the past 6 months, I’ve been living paycheck-to-paycheck. My paycheck? The $10 weekly allowance my mother gives me (and it’s not even weekly, it’s spotty at best). This lifestyle has left me asking to borrow money from friends, getting even more money from my mom, or just having no money at all.
So when the Christmas card money came, I knew I had to hang onto it. I was pretty sick of living destitute and desperate every week, waiting for the refreshing $10 allowance that sometimes never came. So, I decided to institute my very own budget. I didn’t go with the 50-20-30 Rule, because 1) I don’t have any bills to pay off and 2) I don’t feel like calculating the percentages. Thus, I settled with the idea of “paying myself first.”
We learned that paying yourself first means that you put away a percentage -- usually 50 -- of your paycheck/earnings. For people with jobs, this typically means that you direct deposit 50% of your paycheck into your savings account. For me, this meant that I tucked away the money into a little wooden box I have on my dresser. When the Christmas card money came, I divided it in half, threw one pile into the box, and the other half into my wallet. While it was a new experience, I was excited to see what would happen.
Now, the money in the box has grown to $73 and a handful of cents. I only have $8 in my wallet, but I did just spend $20 in Milwaukee, $10 at BW3s, and $7 at McDonalds. And those are just the expenses I remember. Basically what I’m getting at is: this budget thing works. I have plenty of money saved in my trusty box, and I still am able to spend my money as I please. It’s great.
But let’s broaden the context for a second. According to Willis Tower Watson, “18% of workers earning a salary greater than $100,000 are living paycheck to paycheck.” Likewise, Charles Schwab says, “59% of adults in the US admitted to living paycheck to paycheck in 2019.” Clearly, there’s a problem. Americans are choosing not to budget, and it’s hurting them. With no savings, they’re forced to live paycheck to paycheck. Unfortunately, they’re dealing with a lot more finances -- and stress -- than I was. This tells you that budgeting is seriously needed today in America. Debt and financial illiteracy is a serious issue.
Learn from my case. Budgets really work! They worked for me (even with no job), so why couldn’t they work for you? The only thing stopping yourself is you; and you seriously don’t wanna end up like the 59% and 19% of Americans struggling today. So, please, budget.
Works Cited
Mint, /. “40 Financial Statistics for 2020.” MintLife Blog, 21 Sept. 2020, mint.intuit.com/blog/financial-literacy/financial-statistics/.
It really helped that you included a personal story about budgeting, especially since a lot of us can relate and not everyone has a job. It was helpful seeing someone else go through what helped them with their budgeting ways to compare and contrast to my own. I really should start putting half of my paycheck in my savings account. I don’t live paycheck to paycheck, but I also go out with my friends and my boyfriend a lot and wind up spending a lot of my money as we love to go out to eat and go shopping, things teenagers love to do. Reading this though reminded me that I do have to be mindful of what I’m spending, and that I don’t have an unlimited amount of money. Thanks for writing this and reminding me to start budgeting again!
ReplyDeleteA lot of people our age can relate to brushing off the importance of budgeting. I never used to think about saving money for the future until a couple years ago when I had to start thinking about college. Your personal experience is very enlightening because it helps me see that all of us are in the same boat, and at the end of the day there isn't one way to budget. I liked how you pointed this out because everyone has a different lifestyle so planning a budget is something that can be frustrating yet necessary. One thing I do wonder is how we can help ourselves and our peers remember the importance of budgeting even when we don't live paycheck-to-paycheck?
ReplyDeleteThis is really useful and genuinely inspiring to hear about a person in a similar situation who benefits from budgeting in small ways no matter how rich or poor we are, job or no job. This is something that I should start doing now that I have a job and a paycheck, so this is actually really helpful to inspire me to do it.
ReplyDeleteThis actually helps me a lot because I don't have a job either, so it's nice to hear that even without a job budgeting can help me to save money. This has definitely inspired me to actually take care of my money and to take a lot of it out of my wallet so that I don't have the accessibility to spend it. Do you think many Americans don't budget because they are too lazy? Cause I know that's part of the reason I don't.
ReplyDeleteThank you Gavin for sharing your experience. This definitely helps me right now as I get very few shifts and money is tight. I also appreciate how you acknowledged that we are in a different situation than most adults, so something such as the 50-30-20 rule doesn't really apply to us. Now, I understand you really only discussed your own personal experience, so say for maybe kids that're making more/less money than you-should they go about it a different route?
ReplyDeleteHearing someone's personal story behind why budgeting is so important makes the whole concept and outcomes of it so much more credible. People really should budget, and really the only reason why people aren't doing it (especially as adults) is because they don't know how. I do think you could have explained what the 50-20-30 rule was for people who don't know.
ReplyDeleteYeah, I definitely know the feeling of struggling with money, but I think the point you bring up is valid. Even if you don't have a job, it's important to keep a lot of your money in your savings account so it can gather interest over time. Compound interest will allow it to grow exponentially, so the sooner you keep your money in there, the better off you'll be in the future. I would even argue that you should have almost all of your money in savings so you can earn even more; after all, your checking account only needs to have as much money as you spend regularly. Even if you run low, you can easily log into your bank account and transfer more money to it.
ReplyDeleteThis is very insightful! It's reassuring to see the that saving works for people are age even when you are not making any money. I don't have a job either but I do get the occasional twenty from my parents, so I need to start saving it! This way, by paying myself first, I'll have some money when I actually need it.
ReplyDelete59% of people claiming to live paycheck-to-paycheck is a very large percentage! It is surprising that with salaries such as $100k/year (within the upper middle class) many people are still relying on their next paycheck to get by. I agree that budgeting is important--however I believe that budgeting is also something that comes pretty naturally to most mature adults. I think investing is another side of developing individual finances that not only holds your money, but grows it! But overall, I agree with you, saving in small increments adds up quickly over time.
ReplyDeleteThe idea of budgeting has always been relevant in my head and I have attempted to implement a similar system to yours over the last summer and I myself was able to save a hefty amount while having money to purchase my own pc parts. I could see myself trying to save more over this next summer as I have nothing I'm looking to buy and the reserve money is really nice to have.
ReplyDeleteI have been in a similar situation for quite a while. With no real source of income I never saw a reason to budget. However, it can't hurt, of course, to understand how to budget on a basic level. I do not want to fall victim to living paycheck to paycheck, along with a majority of Americans. So I certainly understand the benefits of budgeting intelligently and I think I should at least try to incorporate it into my life soon.
ReplyDeleteI used to do something like this but lately I feel like I have been saving less and less money and because of that I have really seen the effects. After reading this it has reminded me of how to actually save money and I think it was cool to see they way you incorporated your life into it with no job and just a little amount of money per week. I think I will try and incorporate it into my life soon again.
ReplyDeleteThis was helpful and insightful;, seeing what another does at the same age and in a similar situation. I do work so I have a source of income, and I tried keeping money out of my wallet but the problem for me is that I have a card which always entices me to buy. I don't like spending too much from my card but at times I find myself buying a lot then not wanting to look at how much is in my account. Since this class though I have been budgeting and watching my spending more. Before I had a job I would make sure I had some money in my wallet but wouldn't put all my money in it at once. I also would put all my coins in a large jar and every time it filled I would cash it in and you can actually get a lot of money from doing it. I liked how you incorporated your experience into your posting it was nice being able to hear a story from a peer.
ReplyDeleteI feel like I seem to always brush off the importance of budgeting. I never used to think about saving money for the future until I had to start thinking about college after I started getting acceptance letters. I think the most interesting then you mentioned was that everyone has a different lifestyle so planning a budget is something that can be frustrating yet necessary.
ReplyDeleteI was really surprised when I read that 19% of people who make over $100k/year are living paycheck to paycheck. Making six figures, you should be able to live quite comfortably in most places of the country (maybe excluding places like NYC and San Francisco with very high costs of living). But it boils down to budgets, like you said. I think a lot of people don't budget, and then boom, they spent their entire paycheck on Air Jordans and have nothing left to save. It's not a good habit to be into, so I think your message and story about budgeting is very relevant in today's world.
ReplyDeleteI also used to not care about saving/ spending of money because i only had at most $500 at once, but now that I have over $2000 in my bank account I now have to learn how to spend and save money for the future because i never had to save money before.
ReplyDeleteI really enjoyed reading this blog post and could also relate to it because I also used to not be good at budgeting, but started putting 50 percent of my paychecks into my savings account to make sure that I always have money in case something happens that I need money. One thing that I found extremely interesting is that adults who are making over 100 thousand dollars per year are still living paycheck to paycheck. This seems like it would be plenty of money to live comfortably, but if you do not budget correctly then this money would not be enough.
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