Homework

In preparation for my meeting with the financial adviser in a week and a half, I'm trying to come up with a new spending plan now that I'm essentially out of debt (yes, yes, I know, I don't own my car yet, bug me less). I'm trying a different approach this time by breaking down my spending in an annual fashion and then bi-weekly fashion.

I started off by making note of my annual take home pay. This is my guaranteed income and does not include overtime, tax refunds, contracts, etc. I then made a list of my fixed expenses and what they cost me annually. I then divided these amounts by 26, the number of pays I get per year.

I've found it hard to 'budget' for many years now because some expenses occur monthly and others bi-weekly, and the general rule has been that one pay per month tends to be a bit short. Now, I'm trying to get a better idea of what each pay dollar should go to so that I don't have to take into account whether it's the first or last pay of the month. Sounds basic, but I'm slow at this.

For the past several years, I've been contributed an amount to a mutual fund and treating that money as my recurring expenses, rather than emergency, account. Today, I opened a high interest savings account to serve as my recurring expenses account. I'll put some money in there at every pay to cover gifts, car expenses, license and registration fees, short trips, etc. I'll talk to my adviser about what I should be using as a trip fund, such as another mutual fund or high interest savings account and how much I should I should be contributing to whatever savings vehicle I'll be using for my house fund.

Now that I know what's left after each pay, I can allot money for flexible spending, including groceries, clothes, coffee and sundries, books, dvds, etc.

This global picture really helps to set goals. I feel really guilty when I buy a coffee or the odd magazine. Now, if I know that by year's end, I'll have put certain amounts aside for medium and long-term goals, I can indulge guilt-free in day to day luxuries.

I think that sticking to a strict grocery and restaurant budget is going to be my hardest since I've never had any sort of discipline that way. Rather than set myself up for failure, I'd like to set up a solid pantry before committing myself to a set amount per pay to top up said grocery.

Rereading this post, I seem like the worst finance manager imaginable. To the extent that I've never seized any (rare) opportunities to sock away money for a rainy day, yes. But I've always had my priorities straight--my rent has always been on time and I've paid off every cent I owed when it was due, keeping a perfect credit record. My only blemish is with Hydro and Bell, but my regular late payments were more about making a statement than being short on cash. So, while I'm not thrilled with my past financial performance, I can still hold up my head. For one thing, even though no less than three financial advisers told me to file for bankruptcy for the sake of my sanity, I chose to just about starve to avoid that option.

At any rate, I'm free now and starting fresh and I guess there's no sense beating the proverbial horse over past mistakes and idiocy.