One of the things I have the hardest time with when it comes to saving money for our ongoing adventure is creating a budget. Add it to the list of many things that are just more difficult to do while living on a boat than while living on land… like hiding a fart.
For instance, while on land, our mortgage was always the same, so it was easy to budget for it. While on a boat, marina prices vary. While on land, shit didn’t seem to break all the time. On a boat… well, you know the story.
And let’s talk about wine… how the hell can I predict how much wine it’s going to take me to get through the month? I mean, what if I had a bad day and all I really want is a nice glass of Malbec, but our wine budget is already maxed out because someone decided that it was a good idea to drown her sorrows with the last little bit of the boxed wine after watching Message In A Bottle one night on Netflix? And not because the movie was so sad, but because it was so bad. How do you budget for that shit?
Thus begins my cycle of not knowing what we spend on anything because it’s never the same. So basically, it’s like just pick a number – any number – and don’t go over it? NO. That’s a terrible way to do it.
In order to create a budget that you can live with while putting money back in savings, you have to determine as best as you can where your money is going and where you can cut back. Even if that means cutting back on wine. Just kidding. If you sit down and just create a budget with no real frame of reference, you may find yourself near the end of the month going way over in one category and under in another. And you’ll rob Peter to pay Paul, which is never a good idea. Peter can be a real asshole when you do that.
Creating A Budget That You Can Live With
So… (drumroll)… Here is my advice on how to create a budget that you can not only live with, but one that you can stick to. I am no financial expert, nor do I offer this advice as the only or best way to do it. It’s simply what works for me, so if you go broke or can’t manage your money, please don’t send me hate mail. But if you love it, please send me cash. Or wine.
- Sign up with a budget tracking service such as Mint. This is a great way to get a general overview of your spending. While I don’t rely on it exclusively, the weekly spending report gives you a good idea of what percentage of your money is going where.
- Get a receipt for every single thing you buy and save the receipts somewhere. Everything. Do this for at least the first several months – it’s the easiest way to see where you might be overdoing it. I don’t care if you bought a donut and that’s all. Get a receipt and save it. Anyone remember Mitch Hedberg’s hilarious routine on this very subject? I don’t care what Mitch says, get a stinkin’ receipt.
- Get one of those accordion folders and, using your receipts, sort your spending into categories. Your categories may vary if you have mortgage, loans, kids in college (we are debt free except for a credit card with a $750 limit that we use only for the rewards perks and it gets paid off every month in full):
Next, add up your totals in each category. Are there any totals that surprise you? Chances are, you’ll be all, “No WAY did we spend that much in such-and-such!” But the numbers don’t lie. How do they look in hindsight? This is where you have to just be honest with yourself. It’s really easy to forego cooking in favor of a Burrito Mazatlan at the Mexican joint down the road, but if you recall, you kind of felt like shit the next day from that big thing and the 2 Pacificos you washed it down with. That’s $40 that you could have put into savings. Yeah, I know – that doesn’t sound nearly as sexy or fun, but then again, neither does sleeping in the v-berth with your husband/wife/partner after you’ve both had more than your share of refried beans. Trust me.
Take all those numbers and figure out what categories you think you could (or should) cut back in. It’s important to be realistic, but also to be disciplined. If you are a movie buff and going to the movies (or having a Netflix account) makes you happy, by all means, keep doing that! Budgets are meant to be guides to help you stick to a financial goal or a plan – not to strip away every ounce of extra spending or fun that you’re entitled to after all the hard work you’ve done.
Now it’s time to create your budget using those numbers. Mint will help you do this, and they will periodically email you to help you stay on track, which is great, but I also still use a good, old fashioned spreadsheet, or even just paper and pen. I like to keep the categories pretty simple – you’ll basically have the same categories you made for your receipts, but you’ll also want to add categories like SAVINGS and TAXES. I always put a little money in savings first (pay yourself first, as they say), and if you work for yourself in any capacity, you’ll want to set aside a certain amount for taxes so you don’t have a Whiskey-Tango-Foxtrot moment when tax season comes next year. You’ll be prepared, and as any boater knows, preparation is key.
Ideally, all of your expenses will fit nicely in your prospected spending categories and you’ll have a little left over at the end of the month to save, invest, or put towards a new goal. On our boat, if anything is left over, it either goes into savings at the end of the month, or it goes towards boat improvements.
Oh, who the hell am I kidding. It goes to wine.