The Case of the Disappearing Beer Money!

Today I’ll present a budgeting idea I developed 10 years ago that works like magic for me. First though, a quick recap. Mr Beerver is a very average first-year college-student living with his parents to cut his expenses and allow him to save a bit over the college years. He wants to save 1,200$/year or 10% of his salary and invest it wisely.

His problem is that the money he wants to save just keeps disappearing before it ever reaches his savings account! He doesn’t lead an extravagant lifestyle but after books, tuition, booze, a weekly subway meal, bus fare and the occasional pizza, nothing seems to be left!

It all disappears kinda like this:

Now, before talking budgeting there are a few things that need to be said as this is a topic very much akin to a minefield. MacDonald’s took some well-deserved flack recently for their attempts to give advice in this field and I can’t guarantee to fare any better.

Everyone who’s been poor can tell you that there is a point where X amount of income simply doesn’t cover a humane lifestyle, no matter what you try there simply isn’t enough money coming in. I’m sure that’s what the McD planners were thinking when they lined up their workers’ wages and expected expenses and found a gap rather like the Grand Canyon that try as they might, could only be filled with ANOTHER job. Yay, two jobs! At least they successfully proved that minimum wage just doesn’t provide enough income for even a humane, never mind decent, lifestyle.

Mr Beerver is lucky for now because his parents cover a lot of the expenses that he’ll have to deal with in the future so he has a bit of time on his side. On top of his college education, it might be a good time to get a better money education as well.

The first thing he might want to do is become more aware of WHERE his money disappears to. It may seem so at times, but it’s not like there’s an actual hole in his pants and that dollar bills are blowing in the wind behind him as he walks.

He spends money on SOMETHING. It doesn’t really just vanish. So where does it go?

Today I’d like to present a super-simple and ultra-efficient way of tracking your cash. You’ll never again have to worry about budgets that simply don’t work out! Beer-money will never disappear into thin air again!

The first day of the month when you wake up, count how much cash you have in your wallet, coin jar etc.

Ie: 25.74$

The whole month, stick ALL of your receipts for cash expenses into a receipts-jar. Don’t throw any of them away and request them when they’re not offered automatically. If you buy stuff from vending machines, take note of it on a pad, or your phone or whetever. Anything you pay with a credit-card or a debit card you don’t need a receipt for because your bank account booklet will tell you all you need to know about those expenses. Just take note of how much money you use to charge cards with because that’s essentially gone when you charge the card even if the product purchases end up in a future month.

At the end of the month, you’ll count your cash again.

Ie: 30.75$

Next, you’ll look into your bank books to see where money has gone.
Expense: 10.75$
Expense: 45.50$
Withdrawal: 50$
Income: 1,000$

So you have 1,000$ of income. That’s easy.

Expenses are trickier.

First, add up the debit card and credit card expenses for the month.
10.75$+45.50$= 56.25$
Count the withdrawal as an expense.

So you have 56.25$+50$ = 106.25$ in expenses.

Now adjust this number with the difference in your wallet.

Start cash – end cash
25.74 – 30.75 = -5.01$

In this case, you had more cash at the end of the month than at the beginning, so you didn’t spend ALL of the 50$ you withdrew from the bank.

Your final expenses are: 106.25 + wallet difference of -5.01 = 101.24$

If you had finished with less cash in your wallet than at the beginning of the month, this would have increased your total expenses. Not a penny is missed and you don’t have to spend hours on budgeting! Woo hoo! More beer-time!

This means that your final savings for the month, whether they wound up in your wallet or in your account were of 1,000$ – 101.24$ = 898.76$

Of course you’ll have many more expenses than I listed but the process doesn’t change and it’s super-easy to see if you’re doing better or worse at the end of every month. I think budgets don’t work for many people because they’re just not designed very well. I can very well say that gas will cost me 30$ a month but reality might come back and tell me that it was 35$ this month… so much for the fantasy budget! I think my approach is a better tool to manage money with.

OK, so why even keep the receipts if you don’t even use them to figure out your expenses?

The only reason to do so is to familiarize yourself with WHERE the money is going. It’s likely going to cause a few guilt-trips but it’s reality. You may think: Wow! That’s 200$/month on a bar-tab!? How did THAT happen?

Responsible home-parties may start to be more appealing at this point. Or not. That’ll be your call, of course. If you find NOTHING to feel a little bit guilty about and still end up in the red each month, that means you’re already way too poor and need serious help beyond anything I can offer here. My sympathies as it’s no fun at all. I know ‘cause I’ve been there and I still have a few scars and idiosyncrasies left over from that time.The only other thing I can say if there’s nothing that induces a bit of a guilt-trip is to suggest a new look at what you need vs what you want. If ALL expenses are truly needs and they add up to more than you make, then there’s not much left to say and so I’ll talk more about needs and wants next week.


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About Beer Vestor

I like beer. I like free beer better. With this blog, I want to show you the process I use to get free beer. Follow along if you like but remember that this is for ENTERTAINMENT ONLY! Nothing here is is to be taken seriously and if you lose money in your quest for free beer, it's 100% your own fault for following along with someone who is NOT AN INVESTMENT REGISTERED ANYTHING and who BUYS first and talks about it LATER!

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