In Fall 2018, I was moving to San Francisco for an internship. SF is an expensive city and my salary was just enough to get by. I also needed to save enough money to pay for next semesters tuition and housing. I needed to track where every dollar was spent. This was when I started budgeting.
The first month, I was pretty shocked at my spending habits. In the first weekend alone, I spent over $1k USD on cooking equipment, groceries, toiletries, phone plans and more. The occasional Uber, takeout, or a night out would quickly add up. I had a lot less money than I thought.
I’m much better at managing my money now, but I’m glad I started then. Budgeting is one of the best habits I built early on. It has saved me thousands of dollars, brought me peace of mind, and allowed me to spend money on what I enjoy.
For the past four years, I’ve spent a few minutes every Sunday evening to manage my budget. My process and financial planning strategy has evolved over that time, but budgeting is still a core pillar.
Fundamentally, I think about budgeting as understanding what you want, and funneling resources, in the form of cash, to serve those needs. Without budgeting, money can easily become your master. Whether that be spending money you don’t have or lifestyle creep as you begin to earn more.
What budgeting is not, is about being cheap. Before I started budgeting, I was pretty frugal and anxious about where I was spending my money. But being aware of my expenses gave me peace of mind. In any given situation, I knew what was within my budget. I’d also splurge without guilt in certain areas because I could afford it.