Budgeting Basics

By Lev Novak

Do you like money?

So do I. And if you don’t like money, feel free to mail me some. I’ll take it to a nice home, in my wallet.

The problem with money, of course, is there’s never enough. Even when there is “enough” our needs grow to match it. If you won twelve million dollars today, you’d be ecstatic. But three years later, you’d be grumbling about spend-o-crats taxing your solid gold tank.

That’s just the nature of money. So, knowing that, how do we come up with budgeting basics that can apply to every set of wealth?

1. Deduct Necessities.

Before you count your money, Scrooge McDuck style, subtract your rent from your salary. Same with student loans that you intend to pay back.

I know, it’s exciting- your salary has a comma in it, after all- you’re making literally hundreds of dollars. You can buy everything! Until, of course, you can’t.

Save yourself the trouble of scrambling for the rent by mentally subtracting it before hand. You’ll be more reasonable with your money, and that’ll prevent excited pay-day splurges and cut out end of the month panics. It should be a fair trade-off if you ask me.

2. Save 12%.

Take your post rent salary, and understand that twelve percent of that is going to stuff you don’t care about.

That’s not even savings- that’s the cost of living. You need shampoo, dude. You need a haircut and some shoes. Groceries you remember to factor in, but what about the fact that you need a pan for your house? Or that it’s your best friends birthday and you have to get her something? A doctor’s co-pay is twenty dollars, if you’re fortunate enough to have insurance. Is that twenty going to hurt, or have you prepped for it, even unwittingly?

Save twelve percent. That can go to these sorts of “life-taxes” without making you hate everything.

3. Figure Out Your Ratio

Your ratio here is dollars to happiness.

Money doesn’t buy happiness, but it buys things that can make you happy. The best things in life are free, but some of the other best things in life cost more. It’s a spectrum, and it’s time you figure it out.

For me, the ultimate ratio of dollars to happiness is a good sandwich. For lunch, you can get a good sandwich- we’re talking premium, goat-cheese, farm-fresh turkey, home-made pickled jalapeños, whatever- for around eight bucks. Sometimes less, if you’re lucky. And that lunch, when you find it, is amazing. And it’s cheap.

Lots of things in life are amazing, but few things have a higher “happiness to dollar” ratio as that does. A good meal of sushi could do the same thing, but the ratio is way off- it costs four times as much, and if it doesn’t make you four times as happy (is it a date, a special occasion, a real craving, or a “treat yo self” moment?) you’d be better off saving that money for sandwiches.

Metaphorical sandwiches of yours might include: splurging a little more on the good beer, a cool poster you’ve wanted, vitamin water and a bacon-egg-and-cheese bagel when hungover, or a hamburger. Yes, two of those metaphorical sandwiches were literal sandwiches- that’s because sandwiches are awesome. But the point is find the cheap splurges you love, and marry them now. They’ll keep you from bigger temptations and they’re awesome.

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