It took about a decade, but I finally figured out how to budget perfectly.
One thing that has taken years of trial and error is budgeting for unexpected spending and unexpected non-spending. I’m not talking about emergencies, I have a fund for that. I’m talking treating yourself now and then. Sometimes I may book a last minute trip to Denver or get my car detailed. In those months I may go over my budget, but that usually follows or is followed by a month of coming in under budget. When I went to Sicily this year, the month I bought a $1,000 plane ticket was quite a bit over budget, but since I did a farm stay, I only spent $40 during the entire 20 day trip.
When you build a budget, make sure you give yourself room to spend money to take advantage of an opportunity that will bring you happiness.
So, now that I’ve non-humbled bragged about traveling car detailing, let’s get to the real reason I’m consistently coming in under budget: I’m single.
I had a nice run with a bonnie lass last year, so I budgeted about $400 a month to take her to dinner, concerts, gifts, queso, or what have you. It was $400 well spent, I loved spending time with her and making her smile. But alas, now that I’m single - I’m in a weird phase of having about $400 too much money every month. However, I’m already living my best life. I’m playing tennis four times a week, eating organically, I have the car I want (2014 Nissan Altima, so dope), I travel often, and I’m hitting all of my saving goals.
If you come in under budget, I recommend spending it, you deserve it.
But… what brings you happiness? Well, the empirical data is suggesting financial flexibility and no debt brings quite a bit of happiness (I think) so I want to let you know you can also impulse save. So, that is what I have been doing. I’m impulse saving on stocks that I’m impulse buying. Ya’ll… Bank of America trades at like $25, what is the difference between having three drinks or buying a share of BOA? Well, BOA will probably be around for the duration of your life and alcohol makes you sleepy and fat.
I have only come in under budget twice, so here are my two rounds of impulse saving:
I came in under budget during the two July pay periods and was sitting on about $806.91 that I wanted to spend. I started perusing through all of the click-bait finance websites and additionally ones that actually have useful content. Since the economy is constantly heating up and consumer confidence is basically at 100%, I decided revolving debt was worth buying. I bought 2 shares of American Express for $250 and 1 share of VISA for $180.83. Additionally, Warren Buffet increased his holding in Bank of America, so I bought 6 shares of BAC for $177.24. Lastly, I use AT&T for my cell phone service and it is amazing. AT&T is also buying up competitors and industry disruptors left and right, so I decided “why not” on this dog of the economy. I bought 6 shares for $198.84.
A few days later, I received an insurance payout from State Farm because someone totaled my car. I made about $1,000 on that ordeal, so I increased my position in BAC and VISA, purchasing 11 shares at $338.91 and 2 shares at $366.16, respectively.
I must add that Merrill Lynch offers free trades to certain clients. I would only recommend this “impulse saving” technique if you find yourself sans commission fees. Additionally, you should pay off debt before you start impulse saving in the stock market. Start with your highest rate. The best “happiness bang for buck” is paying down debt.
I hope this shows you that saving can be fun! This is literally the same thing as gambling, but with a much larger expected return. I don’t see any reason you can’t view these purchases the same way you view a new bag, a nice dinner, a weekend trip, or dinner with a friend. The idea is to be able to spread your money out so that you are living your best life while acknowledging that living your best life involves financial flexibility.