How To Budget When You Are Poor

piggy bank with coinsSo, most of the people I’ve talked to about budgeting over the years tend to fall into two camps.

  1. We have enough money, we’re good.
  2. We don’t have enough money to budget.

I don’t go around offering advice or trying to push information on people, but I use phrases like “It’s not in the budget” or “I’m working on the budget” relatively often so I think people feel they have to say something.

I think they think I’m hinting at something. Like, HEY I HAVE A BUDGET WANT ONE??

Which is not the case. My business is my business, I’m not trying to convert the world.

That being said, I keep it out in the open because sometimes people want to know. I don’t know when that’s going to happen, so I just kind of have to be open to it.

The first group is fun, because they think I budget because I don’t have any money. It’s actually more important to budget when you have money, but I’m not there yet and telling people how I used to have money tends to make me seem like I’m trying to keep some kind of southern gentility thing that I do not have.

So I smile and say, “Okay.”

The second group I can have a better conversation with because once someone knows you are poor and are willing to talk about it you realize you’re not alone and aren’t going to be judged. There are so many very, very smart poor people. The problem is we were all told from birth that we were going to cure cancer and do great things, so when we fall on hard times or end up poor we are smart enough not to let the general population know about it.

We post our photos on Facebook, participate on Twitter, and are careful to be honest but it’s the honest of cracking open the door so you can only see in a little as opposed to throwing open the door and letting you see our full lives.

But when we find someone similar – smart and poor or even smart and middle class – there is an understanding. We know each other as kindred spirits. People who have gotten to the same place I am and we can relate to one another in ways other people might not understand.

When these people tell me they don’t have enough money to budget it hurts my heart, because I want to share everything I know but I know that could be overwhelming and I don’t want to do that to anyone.

Step One – Write It All Down

No, really, you’re thinking, “Duh.” right now and thinking about all the things you owe and if you keep thinking you’ll just stop thinking and go back on Facebook and forget we were even having this conversation.

Don’t do that.

Just take a piece of paper or open an Excel spreadsheet and start writing it down.

Every. Single. Thing.

Monthly bills, quarterly bills, debts, student loans, car loans, whatever it is you owe or pay, you have to write it down. Don’t forget to do your best to estimate gas usage (Check your online debit or credit statements to figure this out) and tolls. Oh, oh, and don’t forget website hosting and domains. If you do have a bunch of domains, add another worksheet to the spreadsheet and get those monthly totals so you can put them in your spreadsheets monthly and not be surprised by that one month you went a little nutty and bought ten domains at once.

I have three worksheets on my spreadsheet.

Bills – Domains – Debts

I like to track my debts for two reasons. One – because I want to be able to see everything at a glance. Two – It feels good to bring those tallies down – however little – every month after making a payment. The car payment is the one I watch most closely.

Step Two – Pick Your Pony

While my car payment is my go-to bill that I cannot wait to get rid of. (More than the rest. It’s assumed you want to get all those monkeys off your back eventually, but you have to start somewhere, right?) I’m sure you have a bill that makes you a little sick to your stomach when you think about it, a little nauseous when you see it in the mail or get that reminder email.

Whatever bill that is, focus on it.

Once you have everything on paper or in your spreadsheet, you’ll have the brainspace available to do that. You’ll be able to focus on one bill because you’ll no longer be THINKINGABOUTEVERYTHINGALLTHETIMEANDFEELINGOVERWHELMED.

Step Three – Write Down Your Income

It’s not just about the expenses, it’s important to find out just how much of an income problem you might be having. A vague idea of your income vs. outgo is not enough in this case. Knowing you don’t have enough isn’t going to cut it. It will hurt at first (trust me, it will hurt) to see that hard and cold number. The one that tells you that somehow you’re going to spend $50 on groceries for five people.

But in terms of income, pick a place on your budget to write down that income.

Possible Setback Moment: “I don’t have regular income. It fluctuates. I just lost my job. I need to check the cushions for change.”
Solution: Stop that. Write down what you know. Estimate what you can. Get through the fear.

Don’t Expect Perfection (for a while, anyway)

See, here’s the thing. The first spreadsheet or piece of paper you write up is going to be crap. It’s going to be absolutely terrible. You’re going to look at it and you might think you have created the worst budget ever.

It doesn’t matter. Really.

It takes months to get your budget to look remotely cohesive. But if you would like to start with something other than a totally blank screen – because goodness knows that is not a fun place to be – visit Budgets are Sexy and grab one of their many budget templates to get you started!

The thing is, once you start and get most things down, you might forget about your budget for a month here and there if you have no reason to obsess over it (I’m the first to admit that obsessing about a budget doesn’t come naturally for everyone.) To counteract the one-and-done super-ineffective budgeting method, I would recommend setting a phone alarm or a Google Calendar alert so that you (and your partner, if applicable) can sit down once a month and revisit what’s happening and look forward toward next month.

Step Four – Look at New Ways To Make Ends Meet

It’s a tough market out there right now. One of the things we found when we looked at alternative options for our families was that white collar work was not necessarily the right choice for my husband. We checked the different unions against the Bureau of Labor Statistics Occupational Outlook Handbook (super handy resource) and looked at the projected five year outlook compared to Randy’s interest in each field.

If you aren’t sure what you want to do, start searching categories and see if anything jumps out at you!

Oh, also, now that white collar jobs have longer hours with the same salaried paycheck, you might want to look into getting a government job. The official Federal government jobs database is at USA Jobs. Your state may also have an internet jobs listing (Illinois has a dedicated government job website.)

There are a bunch of other ways to make money, of course, and if you have a passion (I don’t) then make a business out of that from scratch and build up some clients and cashflow. I’m just trying to throw things out there other people might not have thought to blog about yet. I mean, seriously, everyone preaches work at home jobs – I’d like to take this moment to propose jobs with benefits and pensions and health insurance and predictable hours and a salary you can send your kids to college (at least a state school) with. I mean, sure, security isn’t for everyone but usually there’s a sturdy partner and an artsy partner and one can get the secure job and the other one can do all the risky, fun things.

If that works for you. If both of you want to sell things on Etsy all day, you do you and do it with all your heart.

So budgeting when you are poor is about being honest, putting it down on paper or laptop, and then making a real plan. The budget makes both short term and long term planning much easier because you can see everything in front of you instead of having to look through the back of your eyes into your brain all the time.

Do you have any fun or practical budgeting tips?