Simply put, the way to stop drowning in debts starts with the buoyancy of budgeting. When you unpack that, not all of it is as horrifying as it might sound, but some of it’s a bit worse than you probably initially thought it would be.Debt can overwhelm you. Western society is pretty much based on the expectation that we will all participate in the debt economy, rather than saving or employing other strategies like helping one another, so it only takes one or two bad decisions to leave anyone up to their eyeballs in it, or worse. What seems to come next is the same thing humans tend to do whenever something is too depressing or horrifying to look at: we don’t. As with most circumstances in which our first instinct is the struthious option, it’s also the worst option. This is a case where you can’t look away.
Budgeting starts with looking.
The “b” word — for me, at least — conjures up visions of endless columns of numbers, piles of pencils worn to stubs, and one of those green eye shades that old-timey bookies and accountants always seem to wear. To anyone who is discomfited by numbers, experiences math anxiety, or associates net worth with self-esteem, there are no appealing images conjured up by the word “budget.”
Take a few deep, cleansing breaths, one after the other. Visualize roots extending from your root chakra, down through your feet and deep into the earth. Let the planet below you take that tension, and allow your heart to slow back to its regular beat. I am not going to ask you to prepare a budget. All I expect from you right now is to take a look. You will need a piece of paper, and something to write with.
- Look at how money is coming in. You’re going to need to have a general sense of where you look for money. Jobs are the first thing people think of, and often the last, but money comes from many directions. If you sell items online (here’s my humble shop, plug plug), that counts, as does finding money in the street, dividends from your investments, refunds from empty cans and bottles, and that monthly check some lucky sod is getting after buying the right Win for Life lottery ticket. Take a few minutes and think about all the different ways money comes to you, even if it’s just raking the neighbor’s leaves or hitting up your parents for gas money. Write them all down. Now:
- Look at how much is coming in. It might vary, or you might not be sure down to the penny, but put a number next to each stream of money flowing into your life, whether it’s a gusher or only a slow drip. If the number’s not perfect, you can tweak it another time. Just put something down, and if possible make it a monthly number, only because a lot of the things we pay tend to show up monthly, too. Even if the number is entirely made up or jumps around wildly, make the effort to convert it into a monthly average. You’re just taking a quick look, so it doesn’t have to be perfect. You might not be surprised about the next step, which is:
- Look at where you spend money. Don’t spend more than five minutes on this right now. Just write down, as quickly as you can, a list of broad spending categories. Things like food, clothes, and rent will probably be on the list. Go ahead and lump things together; all the utilities can be on one line and all the medical bills can be on another. Don’t think about the numbers now. Just write down all the types of things you spend money on, whether you enjoy it or not. This is a time to be honest, too: if you spend money to service an addiction or to silence your enemies, make sure you include that, even if it’s in code. When you’re done, take a break, because the next step is one that might roil the ol’ sea of anxiety in your belly:
- Look at how much you’re spending. It will be fine. Just shoot down that list of expenses, spending no more than ten seconds on each, and put down your best guess about the number you’re spending in that area each month. Flit like a butterfly depositing pollen. Nothing will bog you down.
Sink, or swim?
Yep, that’s how people often look at money and society, as a simple equation of self-efficacy boiled down to a single sum. That suggests a level of independence — nay, isolation — which few people actually have, even the ones who feel truly alone. Many of us have life partners whose income and expenses I didn’t contemplate in this brief exercise, for example. Lots of people also participate in non-money economies, like bartering and work exchange. Some of us are fortunate enough to live in some kind of community where people help each other out in formal or informal ways. In short, you’re not absolutely doomed to a slow, painful death if you happen to be spending more per month than you’re bringing in. It’s definitely not ideal, but it’s not automatically fatal.
Using the general numbers you wrote down — and remember, they can all be changed if you realize that something isn’t correct, so don’t consider this a test or anything that serious — figure out if you’ve got more coming in, or going out. Just add ’em right up. A few possible outcomes to this math are:
- You’re making more than you’re spending. Without even looking? Lucky you. Start saving part of the difference before it burns a hole in your pocket, but not all of it. You deserve something nice for getting through the rough part.
- You’re making more on paper but that surprised you. It’s probably not your math, but double-check it anyway. Could be that some of your estimates are off; now it’s time to take a closer look. Odds are that you’re spending money on things you didn’t even put on your list, though.
- You’re spending more than you’re bringing in. Happens to all of us sooner or later. It’s time to think about ways to reverse that flow, but knowing is half the battle.
- You couldn’t possibly be losing this much every month. Again, if the numbers suggest a line of creditors at your door but you’re feeling okay, make sure you added everything up right, and then start double-checking your figures to see if your guesses were off.
If you’re disorganized, checking the numbers might take a few weeks. Not everyone keeps track of old bills, and you may have to wait for the next one to show up before you know what you’re spending for sure; same could be true with income. Remember, this is Poseidon-style, and Poseidon is the god of the shifting of tectonic plates. Slow and steady owns the race.
Ta-da! You’ve started a budget.
You really have, and you should pat yourself on the back for that. What you’ve got in that spreadsheet, or on that napkin, is some semblance of one month’s flow of cash in and out of your life. That’s the bedrock a budget is built upon, because a budget is simply a plan to make and spend within limits. What you’re already making and spending determine your starting point.
- If you’ve got a savings goal, then you’ll just add a savings account to the expenses side, and decide how much money you want to sock away there. (Yes, I know that it sounds puzzling to call saving money an expense, but if you think of it as paying yourself first, it’s more palatable.)
- Money slipping through your fingers? Again, at least you know. The solution is either to spend less or bring in more. Which is more plausible?
Now that you have a working document, it’s just a matter of committing to looking at it — weekly is an interval I would suggest — and checking to see if you are spending or making more (or less) than you predicted (that is, budgeted for). That information may be depressing or exciting, but either way it’s knowledge that can be used to change things in your life.