Yesterday, I read this article which I'm quite certain you did not read. Executive summary:
Make a budget! Here's how:Not to be overly condescending, ADA, but I just know this won't work for you. It's step 2 that I'm particularly concerned about. You would rather die than whip out a pad of paper every time you bought a cup of coffee. You would most certainly not be caught with a spending patch wrapped around your credit card.
- Look at your credit card statement.
- Track your spending for a month by writing down everything you spend money on.
- Make a spending plan.
- Stick to that plan; think before you spend money.
Hell, you're probably not even convinced that a budget is a good idea. I mean, you're an actor! You probably live off of tips! Not all of your income is steady, so how can you possibly predict where you're going to be spending money?
Dude, shut up. That is the most twisted, idiotic logic I have ever heard.
Why do you need a budget? Well, think about the last time you were worried about money. Perhaps you were worried about paying rent on time. Maybe you were already late on rent, and the threat of eviction loomed large. How stressful was that? How much hassle was that? Now, compare that stress with the estimated stress inflicted by making a budget. Perhaps making a budget will be really stressful... as stressful as worrying about rent three times over! But you'll only have to make a budget once, and after that, you'll never have to worry about it again. It's a one-time cost, bitch.
Let me also mention this: it's far easier than you think it is. Seriously, if you have access to the Interwebs, you'll find tons of sites that make it easier. Additionally, Yodlee is a free service that will handle 90% of the work for you; I'll talk more about that in a later post. There are a lot of resources out there to help you with this; there's no excuse not to make your budget.
Here's my worksheet for your budget. If you have your checking account statement and a pay stub handy, you should be able to do it in under ten minutes. For every question, err on the side of caution:
- How much are you guaranteed to make (take home) each month? Assume a worst case for tips (if you usually make $100 a shift, but some shifts you only make $50, assume $50 a shift). Don't include acting jobs or other irregular, non-steady jobs. Use this formula:
[Hourly wage * number of hours worked per week * 52 weeks in a year * 0.7 for taxes] /12 months.
Example: You work at Starbucks 30 hours a week, where you earn $8.00 an hour. 8.00 * 30 * 52 * 0.7 / 12 = 728. You take home $728 a month.
It looks complicated, but it's not, I promise. You can just punch it into the calculator in that exact order.
- How much do you have to spend every month? Here are typical expenses. If you're unsure, err on the side of caution:
- Loan Payments (Student loans, car payments, etc.)
- Food (groceries and eating out)
- Gas, the Subway, etc.
- Bills (Gas, garbage, electric, water, insurance of all types, cell phone, cable, etc.)
Add all of these expenses up.
- Subtract the result of 2. from the result of 1. This is your disposable income.
If the number is a positive one, though, you're in luck. In my next post, I'll talk about what you can do with this money. Here's a preview:
- Save it for emergency or unusual expenses.
- Save it for retirement.
- Spend some of it on fun stuff.