Carr: Budgeting leads to learning - East Valley Tribune: Opinion

Carr: Budgeting leads to learning

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Copyright Martha Randolph Carr. E-mail Martha at Martha@caglecartoons.com.

Posted: Saturday, July 28, 2012 8:48 am | Updated: 8:29 am, Tue Jul 31, 2012.

The Great Recession is slowly easing and Americans are getting back to work. However, most of us have been left with the remnants of a financial hangover from the past 20 years that had us feeling entitled to live large on credit with a middle class income.

Reality didn’t play a big part in our financial decisions and a lot of us were living paycheck to paycheck, borrowing money to subsidize the life we felt we ought to have and right now.

I was no exception and had the bad habit of filling the checking account and draining it from month to month like there was an endless stream. At the time, I would have been able to give you a long list of justifications like being a single parent and a new author as excuses for the lack of savings.

But, the severe downturn in the economy has taught me a few things about myself and my attitudes and how easy it can be to change once there’s a little more information.

I’ve been telling readers about a new online budget, www.YouNeedaBudget.com that helps users assign a job to every dollar, even if it’s to spend it at Starbucks, with a goal of getting consistently one month ahead on all of the monthly bills. I signed myself up in May in the hopes of saving more money on a consistent basis.

That was three months ago and so far, I’ve learned a lot about my thinking around money and it’s been a real mixed bag of news. Sitting down and making a budget got me to look at the short list of old bills that somehow always seemed too big to do anything about and helped me to see where I could cut back until they were all paid off.

There were a few people who I had to find first in order to pay them back and it was important to apologize for how long it had taken me instead of just dropping a check in the mail. One person didn’t remember the bill at all but another was still a little upset over the length of time it had taken me to pay back what was actually the smallest amount. However, by the end of each phone call a few fences had been mended and I was able to own up to my side of things and make things right. That’s the good news.

A bigger insight was how much money I spend without thinking about the amounts on things like parking in Chicago, entertainment or eating out. Over each month I kept having to adjust other categories so I could move the money around to cover what I was actually doing. That translated into a reduction of the savings categories.

My bad habit of spending down to practically zero and how I got there was suddenly very clear. This is the first important thing I’ve learned about a budget. I can’t expect to change how I spend without a road map in the form of a budget. Too much of my spending is unconscious.

In the past, at the end of the month I was always clueless about how I got to zero. Assigning a job to every dollar and keeping track of where they went quickly pointed out where my priorities were and how it kept happening.

That information also makes it possible for me to make some changes.

The second important thing I’ve learned from having a budget is that it’s actually possible to save money just by changing a few of those habits. That sounds obvious but just look at how many of us bought Beanie Babies in the 1980’s and didn’t put anything in our retirement accounts.

I’ll be checking in again over the coming months to let you know how I do at saving money and even the You Need a Budget goal of paying the bills a month in advance. The site says it can take a few months to get a handle on things. The first step is to become aware of what we’ve been doing and then accepting that we need ongoing help in the form of some structure.

That makes me wonder if there are any other dark, dusty corners in my life that I’ve been ignoring so that I could do what I want instead of coming up with a plan about what really matters to me. If this is the start of the lessons I get out of the Great Recession then maybe I’ll be able to look back at these tumultuous years with some gratitude.

More adventures to follow. Tweet me @MarthaRandolph with your recent adventures with a budget and lessons from the Great Recession.

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