Last spring, I decided that it was high time to get my act together. I knew roughly the amount of money that I was spending, but I was curious to find out how little I could spend and still survive. In fact, I was rather certain that I could live on quite a bit less than I actually spent. I didn’t really know where all the money was going.
I then decided to cut to the chase and start budgeting. My first step was to buy a cute little Moleskine planner where I could write down all of the expenses that I have. The second step was to decide on a budget. The third step was to make a point of only paying in cash for the purchases that I make. My Amazon credit card bill was always a pleasant surprise at the end of the month. Five euros for a book may be a very good price, but if you don’t keep track of how many books you are buying, those costs add up extremely quickly.
My budget consists of the basic costs that I have to pay every month (Rent, Cellphone, Insurance, and Internet), money for monthly expenses, and separate categories for travelling (which varies monthly depending on my travel plans) and yearly expenses (like university fees). I have further broken down my monthly expenses into four categories: Cafeteria, Food, Pocket Money, and Other. I know that Cafeteria and Food are both food costs, but since I pay in the Cafeteria with my Mensakarte and not with cash, it made sense to me to split the costs.
What I have found out is that budgeting is like a game. You begin the month with a certain amount of money, and if, at the end of the month, you have not spent all of the money that you budgeted, then you have won. The more money you have left in your budget at the end of the month, the higher the score that you have earned.
A penny saved is literally a penny earned.
And what is the prize that you get if you successfully “win” for any given month? It turns out that living within your income is a prize in itself. There is a major satisfaction that you get when you know that you are not exceeding your income. It’s a lot less stressful.
But I’ve built in extra incentives into my budget game. My budget for pocket money is miserly: 20 Euros a month. 20 Euros is enough for me to go to one football game, to go to the movies once, or to buy 5 books. In other words, it is basically nothing when you consider that that is all the spending money I have for the entire month. The incentive for successfully budgeting my monthly expenses is that all of the money that I have left over in my budget for the month rolls over into my pocket money for the next month. If I save 20 Euros over the course of one month, I am literally rewarded with 20 extra the next month.
And if you follow the rules of the game, it isn’t actually difficult for you to win.
Here are the rules:
Rule #1: Don’t eat out
This includes fast food, pizza, and Starbucks. If you want to save money on food, don’t eat out. Ever. If you do end up eating out, be aware that you will suffer the consequences of your actions. I ended up going out and getting burgers with friends this week, but I did so knowing that that burger would cut my food budget for the week in half. I compromised by eating leftovers from the freezer and raiding my already pretty bare pantry.
Rule #2: Never say “no” to free food
For obvious reasons.
Rule #3: Learn to cook, and force yourself to cook regularly.
When you cook, cook enough for four people and save the leftovers. I’ve found that if I cook twice a week, I eat like a queen. If I cook on Monday, I have enough food for the entire week. Then I cook on Saturday and have enough food for the weekend (I end up eating more at home on weekends because I don’t eat in the cafeteria on weekends). If you make a casserole and there is too much for you to eat in a week, then freeze the leftovers so that you have backup food in case you cheat and eat out somewhere and no longer have any money in your food budget.
Rule #4: Only pay in cash
If you don’t use any credit cards or debit cards, you spend less money. I usually withdraw cash every week, and I usually only withdraw the amount that I have budgeted for the given week. Since I only ever pay in cash, when the cash is gone, I don’t go over my budget.
Rule #5: Get online spending in check
Amazon is my kryptonite. I still occasionally buy things on Amazon (E-books really), but whenever I buy anything on Amazon, I always document it and debit it directly from my budget. I’ve begun a wish list on Amazon of all of the things that I would love to have, but can’t afford to buy. And until I have the money in the pocket money section of my budget, those things will remain on my wish list. A side benefit of this rule is that I now value my physical possessions a lot more than I used to.
Rule #6: Only buy nutritional food
Chocolate, ice cream, and other sweets are actually ridiculously expensive. If you are addicted to sugar, exchange your chocolate for fruit. Fruit is actually a very inexpensive and healthy snack, AND it tends to fill you up a lot more than sugary snacks. In other words, it is a better value for the price. Remember: you are trying to save money, not skimp on nutrition. You have to go to the store knowing the amount that you are willing to pay, and knowing the prices of the good quality food that you are going to have to buy. It is also a good idea to avoid buying freezer food or ready-made meals. It is a little bit counter-intuitive, because students are usually the main consumers of Top Ramen and Mac n’ Cheese, but if you follow Rule #3 and this rule, you will find that you feel a lot better, and you will also have saved money. The problem with MSG infused products is that they don’t fill you up as much as a good nutritional meal. A good well-balanced meal with Chicken, potatoes, and broccoli can be made for under 10 Euros. And you can eat leftovers from your meal for the next three days, so you save a lot of money in the long run. A very good side benefit from this rule and from Rule #3 is that you lose a lot of weight. I’ve dropped about 6 kilograms this year (roughly 13 pounds), and a great deal of that weight was because my budget forces me to eat healthier.
Rule #7: Choose the cheaper alternative
We live in a modern society, and when it comes to spending money, we usually are faced with several choices. Choose the cheaper alternative (unless it results in a decrease in quality that you can’t live with). There are exceptions to this rule. I tried living with cheap shampoo for a couple of months, but I literally couldn’t handle it any more, so I reverted to my old expensive shampoo. But for a lot of things, you can look for deals and alternatives. If generic soap is cheaper than brand name soap, then buy the generic. If you happen to be breaking Rule #1 and eating at a restaurant, choose to eat the Cheeseburger that is 5 Euros cheaper than that Texas Burger that you loves so much. If you eat every day in the Cafeteria, and there are three alternatives that are under 2 Euros and 5 that are over 2 Euros, choose one of the cheaper 3. Learn to value every single Euro that you have (or dollar or pound, or whatever currency you use on a daily basis). A Euro saved is a Euro earned.
Rule #8: Learn to have fun without spending money
Luckily for me, I’ve never had much of a problem with this rule. I don’t really have any expensive habits (with the possible exception of visiting the Amazon Kindle Store with much to great regularity). But it is fully possible to have fun and enjoy yourself without spending a cent. Go to a park nearby and sit on a bench. Read a book. Hang out with friends. Learn and play an instrument (ideally an instrument that you already own so that you don’t have to go out and buy one). Find God (He’s an amazing source of happiness and He’s also completely free). Money != Happiness, regardless of what Hollywood might tell you.