Organizing my finances

I’m not really clear on the state of my finances right now because the way I’ve always organized them doesn’t really work with the way I’m doing things now.

Ok, that was really vague, but let me try to explain.

I’ve never really been one for detailed budgets in the sense that I can spend x amount of dollars on food/entertainment/etc. The way I’ve organized my finances in past was to break down my income and basically spend all that I could in a certain category. So for each paycheque, this is how I would break it down:

  • 50% Living expenses. This included everything from rent/groceries/phone bill/transportation/personal items, etc. Basically, I could spend all of this money every month on anything I wanted, but usually it all went to stuff for daily life.
  • 10% Long term savings. This was for expensive things that would take me a few months to save up for, like for example a digital camera, some new furniture, or it could even be for something like a vacation. Anything that I needed to save for. And if I wasn’t saving for anything in particular, I would just throw this money in to the Investing pool.
  • 10% Splurge. This money is basically to spend on whatever I want, whether it be new clothes, entertainment, eating out, whatever. I guess I could just lump it in with the 50% Living expenses since I don’t really differentiate between the two.
  • 10% Education. This money gets saved up and reserved to spend on any kind of educational endeavors I may want to pursue, whether it be taking language classes or a sailing class, something like that. I was kind of liberal with my definition of education and considered travel educational so this money got spent on travel as well.
  • 5% Gifts. This money gets put aside to be spent on gifts, so when birthdays and Christmas roll around, there’s money to dip in to to pay for the gifts. I’m not actually really big on buying people expensive gifts and prefer to put thought and effort into less expensive but just as meaningful gifts.
  • 15% Investing. Self explanatory, and like I said, I’ve been lumping in the Long Term Savings money into here as well.

The idea was that as my income increased, I would be able to tweak the numbers. For example, drop my Living expenses down to 45% (the dollar amount would remain the same) and bump up the investing to 25%. And this worked for me because money got saved, and I didn’t have to worry about where every penny was going. If they money was in the category, I could spend it, and if it wasn’t, I couldn’t. Very simple.

Except now, things are a little tougher because I don’t have a regular predictable income. I mean, I could still split up all my paycheques this way, but it doesn’t really work because 50% might not actually cover my living expenses. In fact, right now I’m happy to work less and have 100% of my income go to living expenses while I take the time to find the perfect job or figure out What To Do With My Life.

I do think it would probably be interesting for me to have more of an idea of where my money goes, so I’m thinking that for the month of March I’m going to keep track of how I spend my grocery money. I don’t really have a clear idea of how much I spend on groceries every month and it would probably be a good thing to know.

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2 Responses to “Organizing my finances”


  1. 1 Janet February 8, 2008 at 12:06 pm

    There is a great website to help you get control of your money. http://www.moneymadeeasy.com. We have student Real Estate investors use the tools there to get into a better financial situation so that they can purchase more property. You might check it out.


  1. 1 Tracking groceries « centsprout Trackback on March 18, 2008 at 9:37 am

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