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Budgets. Yawn. Why bother? I prefer the uncertainty and anxiety of never knowing that I have enough money to pay rent (said no one ever)?<\/span><\/p>\n

My Paris Budget<\/h2>\n

So, I created my first budget when I went to Paris during my junior year in university. I had limited funds, an <\/span>exchange rate<\/span><\/a> to manage and I was too proud to go to my parents if I fell short. My simple budget gave me security, flexibility, and confidence while building mindful spending and other financial health skills that would pay dividends for the rest of my life.<\/span><\/p>\n

Here\u2019s<\/a> what my budget for February 1987 looked like. First, I wrote down all my spending daily. I coded each expense in one of eight categories (\u201cN\u201d<\/span> for <\/span>nourriture <\/span><\/i>(food), \u201cL\u201d for <\/span>livres <\/span><\/i>(books), etc., in French Francs:<\/span><\/p>\n

\"Spending
I kept a record of all of my spending during the month, using the technology of the day.<\/figcaption><\/figure>\n

Next, I added up all the spending in each category. The biggest was food (N). This was France after all! As you can see under <\/span>Not\u00e9<\/span><\/i>, I was a good boy that month, with recorded spending of 2,714F vs. a 3,800F budget for the month:<\/span><\/p>\n

\"Budget
I added up spending in each of eight categories at the end of the month.<\/figcaption><\/figure>\n

Handling Imperfection<\/h2>\n

However, my record-keeping wasn\u2019t perfect. When I tried to reconcile my recorded spending (2,715F) with the changes in my cash and bank accounts (2.857F), I was missing 142F. This is the reason for my third column, \u201c<\/span>ponder\u00e9<\/span><\/i>\u201d. I rounded up and added to categories like food and amusements where I likely forgot to record some spending, to create more accurate estimates.<\/span><\/p>\n

\"Budget
I tried to match the change in my bank balances and cash to the spending I had recorded.<\/figcaption><\/figure>\n

You can see how I kept track of my spending progress during the month below so that I wouldn\u2019t go over:<\/span><\/p>\n

\"Running
I kept running totals of spending in certain categories during the month.<\/figcaption><\/figure>\n

Finally, I tracked my spending over the year so that I could make sure that I didn\u2019t run out of money during my year away.<\/span><\/p>\n

\"Annual
My annual spending plan. I financed my year with summer earnings, a student loan, Pell Grant, gifts and help from Mom.<\/figcaption><\/figure>\n

Why did it work?<\/h2>\n

My budget was free to create and manage: nothing to download! It didn\u2019t take much time: a few minutes nightly and a half-hour at the end of the month.  It worked for me: I didn\u2019t run out of money. Why?<\/span><\/p>\n