19. Budgeting for Survival AND Growth

Most people are extremely wasteful with their money. I understand wants and have often indulged my own; but never to the extent of not being able to pay my bills. I cannot stand when I see people do this. For the last six months I have lived a transient, nomadic, minimalist existence and am a full time student with no steady income. During this time my finances have been obliterated, yet I have somehow not missed a single bill. While I can sing the praises of minimalism all day, the last half year has reinforced an important life lesson: no matter how much spending you are able to cut out of your life, money is still important. You still need it to live. Legally, at least. I currently find myself unemployed, with less student loan money than anticipated, and a list of expenses coming up over the next few months. The good news is that I am getting a sizable tax return - the only benefit of paying over twice your salary for tuition. This money is going to have to get me through the next few months. Enter Gift 19 - the discipline of a budget.

I've had a number of people ask me how I survived the last several months with no income. My response? A combination of self-denial, frugal decisions, and the kindness of others. What was lacking was a budget. I'd planned enough to make sure my bills were paid, but because I had so little money I'd not been great with what was left over. Don't get me wrong, I wasn't spending like crazy. In fact, I'd only had about $20 left per month. But I know I could have been wiser with it. Most people would disagree, but financial principles are the same no matter what amount you're dealing with. 

There are many different views on budgeting your income, but generally all agree that you should try to keep your expenses at about 50-60% of your income. This is understandably difficult for some without a steady job. I may have minimal expenses, but I also have minimal income. How does one budget in that situation? Here's how I did it:

• I figured out what all of my minimum expected expenses will be for the next 3 months and added it up.
• Make a commitment to NOT add anything to these expenses (unless absolutely necessary).
• Then added up all money that I currently have & what I know will come in the next 3 months. 
• Take the difference of that to see where I stand. If necessary make adjustments.

I want to be clear - this is not a long term plan to get rich. This is more of a survival budget. But there is now wisdom in my minimum expected expenses. Earlier I mentioned my minimal discretionary spending. That's still included, but now I've decided what it's going to before I spend it. I'm investing in myself. Here are a few of things I'll be doing to wisely use my minimal money to improve myself:

• I'm looking more into building my own site - a goal I've had for a while
• There are some books on my reading list that I know I want to own. I'll use sites like half.com to get great deals cheap!
• I'm searching for a creative hobby such as painting or drawing. I'm setting aside a small amount ($5-$10) just to get started
• I'm making sure to save enough to move on to the next place in a few months. (I know that this will be vital to my growth and happiness)
• Also - I'm finding a way to give away some of my money and save some as well. Again - principles apply no matter what the amount

I encourage you to take a look at your own finances, and consider making a budget. For the last year or so I've followed the folks at Get Rich Slowly - they always have solid advice for wise financial decisions. Highly recommended. 

What about you? What budgeting strategies have you used that work?