Sunday, February 1, 2009

Cash-based budgeting

So despite having cleared all of my debt I am not saving money at a rate I feel I could. My biggest issue with wesabe and the like is that while it is very very informative, it is all post-purchase analysis - IE I've already spent the money. I want to try a more proactive approach that will keep my purchases in line.

I find more often than not it is very hard to mentally add up purchases that I make over a 2 week period. If you asked me how much I spent in the last 2 weeks I would tell you a number that would be off probably by almost half. I just can't do it. I think my issue is that when I spend $30 three times in my head that adds up to "not much, oh... 50$ or so" not the near $100 it really cost. So I end up without any concept of "reduce spending this week since last week was over budget". It doesn't help that my bank account statements online are about a week too slow, so i make any financial decision on those values based on old information.

Anyways, whatever the reason for my math failures, I'm going to try a pure cash based budgeting approach. I get $450 every 2 weeks to spend on everything. That works out to me putting about $1000 in the bank every month. If I can spend less than that, that's great, my girlfriend and I get to go out or buy something we want.. but if it's a week in and we've got $100 and that's it we'd better save for some groceries!!

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