7 July 2011

budget nazi

Right up there next to birdwatching is another nerdy interest of mine....personal finance.  Wait- don't leave yet, I promise this post won't be too dry.

This interest was basically forced upon me about a year after we bought the house.  As renters of a very affordable basement suite, we once had plenty of discretionary income and zero debt.  We drove nice vehicles that were not financed, took extravagant annual tropical vacations, and paid cash for a (gulp) $7000 designer sectional. Back in the good ol' days of 2009, although taking accounting and finance classes at college, I had zero interest in budgeting.  There was no need to!  My interests were good times and spending money, both of which conveniently often happened simultaneously.

Today, I can't imagine how anyone could survive without a budget.  Even if you're raking in a six figure salary, in my opinion it is so imperative to know where you stand financially at all times.  Especially in this day and age where pension plans are few and far between and the average price of a home in Victoria is $700,000! Yikes.

Some folks use budgeting software like Quicken, others use cash jars à la Gail Vaz-Oxlade, and some people (like me) prefer a simple Microsoft Excel spreadsheet to keep track of everything.

Photo: slice

I won't bore you with too much detail about my budgeting process, however I read this interesting article by Roma Luciw in the Globe and Mail the other day about underestimated budget expenses that I want to share with any and all who will tolerate it!

The article summarizes some of the most severely underestimated expenses as noted by Mark Goodfield, accountant and author of the Blunt Bean Counter blog:

1) Weekly living
While each spouse may only go to the ATM once and has an idea how much they themselves spend, often both spouses are hitting the bank machine and weekly cash withdrawals are significantly higher than they think.

2) Gifts
Most people have an idea of how much they spend on Christmas gifts, but how many birthday, anniversary and wedding gifts, etc., do they give during the year? This is especially relevant for people with large families.
3) Charitable donations
Many people do not track their donations throughout the year. This can be a problem, especially for those who wish to give a certain percentage of their income in a particular year.

4) Automobile
Many people fail to consider all of their car expenses. These can escalate quickly when you include your lease, or loan principal and interest, repairs and maintenance, parking, insurance, tolls, etc.

5) Sin costs
The cost of beer, wine and cigarettes is never correctly accounted for and often severely underestimated.

6) Kid’s programs
Today’s child is often enrolled in multiple programs, which are very expensive and can add up quickly.

7) Cottage
Cottage costs are twofold. First there are the property taxes, mortgage, interest payments, repairs, maintenance, insurance and utilities. In addition, there are often hefty entertainment expenses – think BBQ meats and alcohol – that even the most detailed person would be hard-pressed to track.

8) Restaurant
For some people, eating out is not a substantial cost. But for many double-income families who are too tired to cook or like to splurge on dinners out, these costs are substantial.

9) Women’s beauty costs
Often way understated, but guys, I would not even go there.

First off, I have no sympathy for you if you're overspending each month in "Cottage Costs".  But for the most part, I couldn't believe how accurate this article really is; especially for gifts and charitable donations.  These are two categories that I don't normally budget for, and probably should.

Anyways, the real kicker that I've been trying to get at for the last 628 words is #9 on Mr. Goodfield's list. Ah, the price of beauty.  The problem here is, my guy has chosen to "go there", ignoring Mr. Goodfield's advice to stay far, far away.  This has been a bone of contention in my household ever since I jumped on the budget train about a year ago.

In other words, I haven't had a haircut for 365 days.
I am wearing Pink Chiffon eyeshadow from grade 10.
Apparently Frida Kahlo is my new brow waxer.

OK, it's not all bad.  I still treat myself to a monthly pedi, happily use my Icelandic moss mascara, and purchase a Lancome moisturizer every once in a while.  But I've had to cut back.  Way waayyy back.  And I get no sympathy from the man of the house, telling me I need to "get creative" when it comes to spending on my regular upkeep.  What does he mean?  Give myself a mud facial from the remnants of the compost pile?  Mix up a condiment concoction for lip stain?  Scrub my mother's bathrooms in exchange for a haircut with kitchen scissors? 

When I try to convince him that I require a more substantial budget if he wants me to look presentable, he agrees wholeheartedly, but only if he gets the same additional funds allocated for fishing and beer-drinking.

I sense this will be a never-ending battle, but hey, what good is any relationship if you can't have a good laugh at with each other, right?

p.s. How did I not know that Frida Kahlo and Diego Rivera were once married?  Rivera is one of my favorite artists; I guess I just never put two and two together....amazing what you can learn on this crazy interweb!

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