Recently, I was fortunate to be invited on the Investing for Beginners Podcast and talk about my personal finance experiences and introduce Doctor Budget to the world!
It was a very surreal feeling for me to be on the podcast as the podcast was legitimately the avenue that got me into investing a couple of years ago. I have been on a personal finance journey since I graduated college, but to be on the podcast almost felt like things had come full circle in a way, but at the same time felt that things were just beginning!
I won’t give away the meat and bones of the episode, but I really was given the opportunity to share my story and talk about some why I got into personal finance and investing. I have made some major mistakes throughout my personal finance journey, but I also think that those mistakes have shaped me into a better person for them because I have made it a point to learn from them and not to duplicate those mistakes.
I mean, I literally went through periods where I was too scared after a weekend with friends to open my bank account or look at my credit card statement. I knew that I likely spent hundreds of dollars on food, drinks and just nonsense that weekend, all the while my debt was continuing to grow and grow, and I was just acting like a fool.
I created a budget spreadsheet for me to track my expenses, but I would just lie on it. Seriously. If I had to replace my tires, say $600, I just wouldn’t record it because it wasn’t “reoccurring”.
That was so stupid of me to think that way, but I did so that I could make things fit my budget. I was just fudging the numbers to make my budget look good. Rather than making my lifestyle fit my budget, I made my budget fit my lifestyle – and not by making more money, but by essentially committing fraud of my own personal finances.
Eventually, I overcame this period of my life, and decided that it was really time to get focused on my personal finances, and that all started with tracking my expenses and accurately budgeting.
Step 1 to Getting Your Finances Straight
So, I kind of started from square 1 to get a grip on my finances. Everything that I had ever heard from people was that if you really want to know where your money is going, you need to physically write everything down. That hit home with me because I truly do think that you retain more when you’re outlining each line item and purchase you made, you will be more accountable for your spending.
Rather than writing everything down on a piece of paper, I tracked it in Excel, well, because, that’s my style 😉
Tracking it in Excel was an eye-opening experience for me. At this point in my life, I was just recently graduated from college, was still living in my college town and hanging out with my college friends, and well, basically was living a college type of life on the weekends but with a legit income. All that meant for my budget is that I was blowing more money doing the same stupid stuff.
It took awhile for me to grow out of that, honestly, and every weekend that I continued to do the same stuff was a couple hundred dollars that continued to be wasted. Yes, the experiences were fun, but the amount of money that was lost is disgusting when I look back on it.
Once I started tracking my expenses in Excel, that was the first time that I was actually able to put a number to the amount of money that I was wasting, and that’s what kickstarted the change in my life. I decided at that point that I was done spending money the way that I had been spending it before.
Tracking Reveals Money Pits…
If I wanted to still love that “college weekend” then I could, but only one day, and I needed to be smarter about how I was spending my money, and that I actually could live on a budget and still have a ton of fun!
So, I took my simple spreadsheet and I expanded it into the infancy stages of Doctor Budget. It was a very basic spreadsheet that allowed me to track my expenses and see where the money was going.
Since those first days of Doctor Budget, I have made it much more complex, tracking as many things as humanly possible, and then backing it down to make it incredibly simple, tracking only the bare bones of what you actually need to know.
I am a huge data nerd, and a tracking nerd for that matter, but even I would find myself sometimes not using it because it was too complex. I mean, I was the kid that tracked my baseball stats in THIRD GRADE in Excel, with the help of my dad, of course. I tracked all my golf stats in Excel as well to see how I was trending throughout the season.
I am a very firm believer that if you ever want to be successful in anything, tracking it is going to get you there faster. It’s worked with me with my baseball and golf performance, losing weight, and now in my personal finance journey.
If Doctor Budget was too complicated for me, Mr. Tracking himself, then I knew that nobody else was going to use it.
So, I stripped it down to the essentials of what you will really need to get your life on track and made it available to the public! As long as you know your income and your expenses, then Doctor Budget will do the rest for you.
Tracking Leads to REAL Results…
And my favorite part is that I know that I know that it works. I know it works because it’s what I used to make my own life better. Using Doctor Budget, I was able to turn my life from one where I was scared to look at my bank account on the weekend to one where our savings rate is one that even the FIRE crowd would be proud of.
I really am trying not to toot my own horn here because I don’t think that Doctor Budget is something that’s just so incredibly mind blowing. It’s a budget tool. That’s it.
But do you want a budget tool that’s super flashy or one that’s going to work? Honestly, all I would care is that it works. That’s the point of a budget.
Doctor Budget will get your life on track, just as it did for me, and there’s a few main reasons why I think it will get you setup for success better than any other budget tool.
In a previous post, I outlined how Doctor Budget is a great tool because of three main reasons, but I think that I missed a major reason – customization.
Not only do I provide a very extensive list of potential expenses to plan for, you have the ability to add some of your own expenses to Doctor Budget as well.
The easiest way to fall off the wagon when budgeting is to spend money on unexpected things throughout the month, which can partially be attributed to bad planning but also partially can be attributed simply to the unknown of things!
You can’t 100% be prepared and all-knowing for what is going to be thrown at you, which is why it’s just that much more important to have a budget in place.
Some of the unexpected expenses that I include that you might not think of include Home Improvement, Travel, Car Maintenance and Presents.
All of these are things that you can plan for, but if you don’t take the time to actually create a plan, then you could be in major trouble.
How to Use the Doctor Budget Spreadsheet
The way that I used Doctor Budget is that I will put in X amount, say $200 for Home Improvement, every month. If I spend all $200, no worries, that was part of my budget. If I don’t spend anything, I will then move $200 into my Ally High Yield Savings Account and bookmark it for Home Improvement. That way, when my AC unit dies like it did last year, I have some money already saved up to help lessen the blow of that expense.
Even if I only saved up for 3 months, it’s nice to have already saved $600 of the $4000 bill. Sure, I still owe a ton of money for that dang AC unit, but I’d rather have to come up with $3400 unexpectedly instead of $4000 – wouldn’t you?
I will also do this with presents, travel, and many of the other categories as well. In essence, it’s all about planning for the unexpected.
If you want to go on a big trip, like a cruise, in the summer, and it’s February, why not save $250 from February – May? Then you’ll have $1000 saved up which might even cover the entire cruise! It’s so easy when you spread it out this far, but the key to making all of this work, again, is planning.
Same with presents – why not save in October and November for Christmas presents? You know when Christmas is coming…it’s the same time every year, folks. Personally, I will let my credit card points build up all year and then I will redeem them for cash back in January once my Christmas bills have hit my credit card.
That way, when most people are trying to find a way to cover their Christmas gifts, I am actually in a better month than normal because I won’t have any Christmas credit card debt and I’ve likely received some gift cards for Christmas, so I have spent no extra money (when including the cash back) and I have been given gift cards to keep me from spending money. It’s this sort of mindset that will only occur when you plan, and that’s what Doctor Budget can get you working towards!
Of course, you can’t plan for 100% of things that will arise, so I always include a Miscellaneous budget item which is about 5% of my income. The goal, obviously, is not to have to use this, but again, it’s nice to have some extra money allotted to that expense that maybe you didn’t think of. Having this Miscellaneous budget is going to save you so much stress in the end. I recommend that as you’re first getting started, maybe even stretch it out to 10% of your income rather than 5%.
And guess what – if you don’t use it, then it’s just that much extra money that you can save for the future. But if you do spend it all, take a good, hard look at what you spent that money on. If you spend more than $25 – $50 on a specific item, or genre of items, each month, then maybe that should be its own category?
A perfect example of this in my own budget is something that I have labeled as “face and hair”. Between my wife and I, we spend a good amount on facewash, shampoo, conditioner, hair gel, hairspray, yada yada yada…instead of having a $200/month miscellaneous section, why not make a “face and hair” category and then reduce my miscellaneous by the same amount?
At the end of the day, the same amount of money is being spent, but now I can track that category a little bit closer because there’s more transparency over where that money is going rather than just a catch all of “miscellaneous”.
Don’t Forget about Investing…
You’ll notice that I have ‘investing’ listed as a category as well, and why wouldn’t I? You’re on the Investing For Beginners website! That seems pretty self-explanatory, right?
The #1 most important goal of a budget is to spend less than you save, obviously, but the #2 most important thing is to make sure that you’re saving enough to set you up for the future life that you want! If that’s retirement, then you need to have that in mind. If it’s saving for a new house then you need to keep that in mind. If it’s paying debt off faster then you need to KEEP THAT IN MIND!
The key is to always be thinking about why you’re budgeting because if you don’t know the ‘why’ for your budgeting journey, eventually you’re going to get to a point of frustration and ask, “why am I doing this?” Ok, sorry for the little tangent, but that ‘why’ is just so incredibly important in literally anything you do – especially with finances.
So, back to investing – I think there are two ways to view this to really set yourself up for the future, and it really depends on your mindset:
Option 1 – list investing as a line item so that you can track it each month
Option 2 – do not budget any money for investing and just have it taken out of your paycheck directly
Let me explain further:
Both options are great options and just depend on what is going to personally motivate you to save.
Option 1 allows you to set an investing “budget” of let’s say, $150/month, and then when you transfer money into your investment account, you get that little “high” of being able to track on Doctor Budget that you invested $150 that month. That is good for someone like me that really gets addicted to that feeling.
I am very much a ‘list’ type of person, so checking something off a list really gets me motivated and focused on the goal, just like when I’d track my money being transferred it would be like checking the box off for investing that month.
If you want to REALLY get “high” of this, try investing more than you budgeted, even if it’s only $25 more. If I was able to track that I invested $175 in a month but only planned for $150 – that will really get you addicted…
Option 2 is for the person that would get to the end of the month, see that they have $150 leftover but hadn’t invested anything, and then decided to blow that money on something instead of investing it like they planned.
That was 2014 Andy.
I would see that extra money laying around and head straight to Dick’s Sporting Goods and buy a new wedge, or maybe even save for a couple months and get a fancy new driver. Or buy tickets to an expensive sports game.
Ironic that I would save my investing money to blow it rather than just save it to save it, isn’t it?
But I was immature and foolish.
Some people might say I was young, but I know young people that are very responsible with their money, so I think it’s irresponsible to just say “I was young”. I think I was just stupid. If I could go back to 2014 Andy, I would’ve made myself invest my money first instead of waiting for the end of the month. Sound difficult? It’s not.
It’s actually easier than Option 1 because the decision is no longer in your hands! So how do you do this? Easy!
Let’s pretend you get paid monthly and your take-home pay is $2000, and you want to invest $150 of that. Instead of putting $2000 in your income section, just put in $1850 and have that $150 come out of your paycheck automatically so it never even hits your checking account! Boom, problem solved.
But guess what? There is a third option that is actually what I implement…
I do BOTH!
I have money come out of my account that is my target investment, that way I never will under-invest in a month. But I also have investing as a budget line item, but I budget $0. Then, when I get to the end of the month, if I can transfer even $50, I am super freaking pumped to see that $50 being invested because I know that’s all gravy!
The Bottom Line
You can download something like Mint if you just want the bare backbones…something that might track a visit to Walmart as “Grocery” or a trip to Speedway as “gas” but what if you only bought clothes at Walmart? Is that groceries? Nope. Or what if you bought a case of beer at Speedway? Is that gas? Also, nope.
Or if you bought mix of clothes and groceries at Walmart – just make it half groceries and half clothes – it’s super simple.
The best budget is the one that you will stick to, and the best way to stick to a budget is to find one that is customizable to your needs. If you don’t have the ability to customize the budget, you won’t use it. Plain and simple.
I’m not lying when I say that Doctor Budget saved my financial life and I think that it could do the same for you. If you’re having trouble getting your finances in order, then I urge you to give it a try. Doctor Budget is setup with the great backbones for you to be able to use it, fantastically, as it is to get you to financial freedom, but also giving you the opportunity to customize it to fit your needs.
I’ve talked about how I’ve made it more complex, then less complex, back and forth many times over depending on where I am in my financial life, and that’s good news for you, because all that that means is you’re going to get more and more tools added to Doctor Budget that you will get for free, of course, once you’ve made the initial purchase of only $29.
Do yourself a favor and seriously consider your financial wellbeing and ask yourself – “would I be better with a better budget?”
If the answer is yes, I think you know what to do. If the answer is no, you’re a liar!
Kidding! Kind of. Not really.