6 Surprising Things I Learned From Making My First Budget at Age 43
A new survey reveals that 72% of people say COVID-19 has caused them to become more organized about their finances.
For years, from January through April 15, Christine, 43, would get nagging phone calls from her father, a tax attorney, about tallying up her expenses. In the past, these phone calls caused a lot of stress. After all, she didn’t keep a budget or track expenses and frequently found herself scrambling at tax time. “It was just so stressful to think about anything finance-related,” the busy mom tells Millie.
When the pandemic started in March, Christine’s father had already been calling for two months telling her to get started on her tax returns. Although Christine, who works as an attorney, did not take a pay cut, her work slowed down considerably. As she sat, organizing her expenses for tax time, she realized that for the first time in a very long time, she had the time to put together a budget. Time—and real motivation.
Trapped in her two-bedroom apartment in Brooklyn with her partner and her toddler, she began having dreams of the vacations they could take once the pandemic was over. She also realized that owning a car would allow them to take day trips out of the city, and get a break from the stress of confinement. Finally, she felt compelled, as Black Lives Matter protests filled the streets of cities across America and stories of suffering families filled the news, to donate regularly to causes that mattered to her. When her company offered to match employee donations to causes, she was pushed to action.
You don't have to sacrifice culture, warm weather and other perks if you're on a budget.
At first, Christine was intimidated by budgeting, but soon found that creating and following a budget actually gave her some relief from all the stresses of life in a pandemic. “These past few months, I keep feeling like I’m failing at things,” she says. “It’s nice to have one area of my life that is better than it was six months ago.”
She’s part of a larger trend: According to a new survey from First National Bank of Omaha, 72% of people say that the pandemic has caused them to become more organized about their finances. Here are some of the surprising things Christine learned about creating and sticking to a budget:
Tackle shame, fear, stress and other negative emotions first. For years, Christine didn’t budget in part because she didn’t want to deal with the stress of having to take a hard look at her finances. But in the end, not dealing led to more stress. Experts say that’s true for a lot of us, which is why it’s important to tackle any shame, fear or stress you feel around money even before you crunch the numbers. Remember: “You are not your debt,” money-saving expert Andrea Woroch says. “It doesn’t reflect who you are as a person.”
Make your own rules. While traditional budgets often have people divide expenses into “needs” and “wants,” Christine looked at her life and realized her spending seemed to fall into three different categories. So instead she divided her expenses into “needs,” “treats” and “gimmes.” Needs are her necessities; treats encompass dining out, fun excursions and gifts; gimmes are clothes, toys and impulse buys. While these categories may not work for you, experts agree that a budget that is truly personal is one that will work best.
Save to spark joy, fast. Plenty of personal finance advice is all about saving for longer term goals like retirement—which you certainly should do—but it’s also essential to create short-term goals that you can get excited about. This will give you “small victories” that keep you going.
For Christine, that short-term goal was buying a car so her family could vacation. After three months, Christine was able to save $1,500 in cash to buy a 2004 Toyota Camry in June. It had a hole in the bumper, but it got her family to the beach more than a few times, which helped make their summer more bearable.
Give back. Research shows that buying things for others boosts happiness, so work that into your budget. For Christine, this meant creating space in her budget so she could afford to donate $350 a month to organizations including the soup kitchen in her neighborhood and the Bail Project.
Taking baby steps is OK. Christine started by looking at her expenses once a week, and writing down what she spent. When she had two months of expenses organized, then she began to set goals. “If you try to change everything at once, you’re going to burn out,” warns Woroch. “Make small changes until they become a habit.”
You only need 10 minutes a week, says Christine. To create her budget, Christine used free Excel templates she found online—one is a simple budget worksheet, the other is a checkbook register—though you can also opt for a free app like Mint, which automatically pulls in your bank account information, if you prefer a more high-tech approach. Using these free tools has allowed her to budget efficiently. “I update my spreadsheet, and pay my bills,” she says of how she spends her 10 minutes a week. “I don’t have to worry about expenses because I know what I have and what I’m doing. It’s been great having something that I can control.”