There are several positive aspects of establishing a budget. Perhaps the biggest benefit is that investing the time to look at your actual spending patterns and habits will force you to see how you’re actually doing. Not what you want to be doing or your theoretical/ideal budget, but your ACTUAL budget. Second, taking the time to do it will force you to think about whether or not you’re making progress towards your stated goals or if you’re just sort of drifting.
I recently pulled the last 6 months of household expenses for me. I have a confession. I like Starbucks. A. Lot. Yikes. As in $715.96 in 6 months a lot, or ~$120/month. And I know it’s actually a bit more than that since sometimes I pay with cash and that’s harder to track. So, let’s call it $150/month for coffee. One hundred and fifty dollars per month. For coffee. Yes, I know that number is crazy ridiculous. For the record, that amount is not just for Starbucks - there are other coffee shops that get my money. Ironically, I seldom actually just get plain old coffee either. I'm sure a lot of my friends know my order well by now. Iced venti Americano, extra ice, with room for cream. Sometimes just once a day, sometimes twice. At $3.55 a pop, you do the math. It adds up quick. This is often referred to as the "latte factor" - the concept that many small expenditures add up to a significant expenditure over time.
We are all creatures of habit and I enjoy the routine as much as the caffeine, but cutting it in half should be reasonable (and probably better for my health anyway). The point I'm trying to make is that by taking the time to go back and look at my expenses (a process that's relatively simple using mint.com), I forced myself to see a number I knew I wasn’t going to like. I’m a visual learner – and seeing that number should serve as the proper motivation I needed. While I know there are other areas in my budget I could work on, this one stood out like a sore thumb.
We all have our habits and we pretty much know ourselves better than anyone. But by being pragmatic and periodically reviewing your own budget, you’ll really force yourself to look in the financial mirror. So many people don’t want to look because they’re afraid what they’ll see. Starbucks is a big ugly wart on my budget. Must get that under control.
Financially speaking, one of my highest priority goals is to finish saving for college for my 2 daughters. We are getting closer and closer to our goal and I’m so glad we started when we did. Time truly does fly by and it only seems to go faster as they get older. I only have about 4 more years to save for my oldest, and as she gets closer to college age, I will become even more conservative with that money – all but taking it out of the stock market. So now is the time to really focus on knocking that goal out. Cutting back on Starbucks will just get me there quicker. Sadly, literally as I’m writing this blog I had an email from Starbucks come to me. Good grief. It’s like they already know I’m going to cut into their earnings per share!
Not picking on Starbucks. We all have areas in our budget we can sharpen. Even us budget nerds. Do you have a budget confession? What is it? I'd love to hear from you.