The Hustle of Sistah Ant

I got a question from Ben yesterday in the comments that I wanted to discuss today - here goes:

"…[I]f I CAN do without, because clearly I can when I am broke, shouldn’t I ALWAYS be living like I am broke? And how do you make a budget around being broke?"

I think the answer is going to be different, depending on who you ask and who you are.  If you ask Moneymonk, she’d probably remind you that you can do income-producing things so that you can make more money to afford the things you want.  That way you don’t have to live like you’re broke.  If you ask Single Ma, she might remind you about how important discipline is (and how important it is to learn from and move on from your mistakes when your discipline slips).

I’m pretty good with the discipline.  I’ve been going without all kinds of little perks, trying to cut corners here and there, and it has helped me a lot because reducing the amount of spending always gives a budget more wiggle room.  I guess in that sense, I do live like I’m broke.  I decided which sacrifices I’m most comfortable with and committed to them:  I still don’t pay for cable, daily take-out lunches, clothes-on-a-whim, and other non-essentials.  But that works for me.  I guess some folks won’t do without cable, but they can deal with bagging lunch.  I think the key is to stay committed even after your means increases.  In my case, I’m netting about $1,600 a month more now than I did at this time last year. (This is where Moneymonk’s advice to increase your income comes in.) My approach to the increase wasn’t, "Oh - that’s $1,600 more that I can spend a month," but instead it was, "Oh! That’s at least $1,500 more that I should be able to SAVE a month."  Because I KNOW something is going to happen that’s going to make me want some money - an emergency, a layoff, a thing I’m going to really, really really want.  And when that time comes, I want to be prepared.  That means more to me than eating take-out for lunch everyday, or having MTV.  So I kind of think you answered your own question - just in words that frame it in a more negative perspective.  I usually don’t think about it as living like I’m broke - I usually think about it as living like I want to have some money in my pocket.  It feels so good to be facing unemployment knowing that if I need it, there’s a cash cushion in the bank with my name on it that will get me by for months.  I’m not a baller… but I feel like one.

Now, about making a budget around being broke.  As I get started, I pretty much think about the worst-case scenario: what is the least amount of money I expect to have in my hands?  Assuming that it will be all that I’ll get, then I look at my obligations and responsibilities and figure out when and how to take care of those things with (which means subtract those amounts from) my worst-case scenario amount of money, based on my priorities.  Like I did in yesterday’s post.  My priorities are shelter, food, maintaining my credit score, savings, then everything else.  That’s going to be different for everyone - back when I was a student it was shelter, food, everything else.  When I become a homeowner, it’ll probably be shelter, food, savings, everything else.  Either way, if you’re working with a limited amount of money, you don’t have to figure out how to make a budget around it - if you prioritize your needs, they will do your budgeting for you because your money will be spoken for when you get your paycheck anyway.  The only difference I find between budgeting when broke and budgeting otherwise is that the latter gives you more wiggle room (I eat lunch out more often now).  When your wiggle room is gone, it’s just gone.  You can’t spend money you don’t have if you’re not relying on credit.   There’s no budgeting required there, either.  Whatever’s left over after you pay Peter and Paul is your allowance, and when it runs out, it’s gone, so anticipate your needs, your spending triggers, and figure out economical ways to get around them so that you can make it to your next paycheck, which is the name of the game…  at least until you can take Moneymonk’s advice and get some more income.