Bridging The Gaap

Download BTG’s “Where’s My Money” Excel Budget Template

BTG’s Excel Budget Template has been revamped. Check out what’s new in version 1.1!

Changes in the new version:

1) Net monthly income can now be calculated from weekly pay inputs. No more trying to guesstimate your gross annual income!

2) You can now determine what percentage of net monthly income specific expenditure categories represent.

For example, housing in the picture above represents 25% of this person’s net monthly income!

Download BTG’s “Where’s My Money” Excel Budget Template

N.B! This article expands upon my comments at FrugalDad, as discussed on the MSN Smart Spending Blog.

The Art Of Manliness article entitled “Three Lame Excuses For Not Saving Money” inspired this post.

While all three excuses are interesting the third lame excuse for not saving was perhaps the most important: “I deserve a little luxury”! The article goes on to describe the author’s desire to purchase a $1000 laptop.

Major purchases like this can be damaging, but I’d like to go a little further than the Art Of Manliness post did, and describe the two ways in which this “I Deserve” mentality manifests itself, and what you can do to stop yourself from becoming afflicted!

The “I deserve” mentality manifests itself in two ways:

1. Spending a lot of money infrequently (High Price - Low Frequency Consumer)
2. Spending a little bit of money frequently (Low Price - High Frequency Consumer)

Let’s take a look at these two behaviours more closely.

1) Spending a lot of money, infrequently (High Price - Low Frequency Consumer)

I’ve heard this described as the “Man’s Way” of ruining your finances by Jason at FrugalDad (in a very interesting post I might add!), likely due to the stereotypical purchasing behaviour of men. Regardless of gender, these consumers want it big, want it shiny, and want it now.  These consumers have had a hard day/week/year at the office and that TV is on sale anyway.

High Price - Low Frequency consumers face the following financial risks:

Credit Card Risk: These consumers will purchase an item regardless of whether or not they can afford it, frequently using credit to do so. Frequently these consumers will not be able to pay off the credit card, and are at risk of increasing their consumer debt (which usually carries hefty interest fees!)

Don’t pay until 2058 risk: Consumers inclined to purchase expensive items are often convinced to buy by the Buy Now Pay Later deals offered on many expensive items. While these deals can be useful if a consumer is disciplined enough to pay off the item in full within the time period stated, the trouble occurs when one cannot pay off the loan when it comes due. Interest begins accruing not from the date the payment was due, but from when the purchase was made; if you bought a new computer a year and one day ago and missed your payment date yesterday, you will pay interest on the full purchase price, compounded by a year. For one woman, that meant her ~$3400 purchases had added on to them another ~$1200 worth of interest.

Emergency Fund Risk: Emergency funds by necessity usually hold a substantial amount of money, and an immature shopper afflicted with I Deserve may see their emergency fund as simply a large amount of money they can tap into to make their expensive purchase (or to bail out the purchase they put on their credit card). This puts the consumer at risk if there is an emergency, but no funds to handle it.

It is much the same with the other type of consumer afflicted with the I Deserve mentality, with some notable differences.

2) Spending a little bit of money infrequently (Low Price - High Frequency Consumer)

I’ve heard this described as the “Woman’s Way” of ruining your finances, likely due to the stereotypical purchasing behaviour of women. Regardless of gender, these consumers tend to “treat themselves” to their small but frequent “indulgences”. These consumers are under constant small stresses, and heck, that $9 coffee always makes the day go a little bit smoother anyhow.

 
Low Price - High Frequency consumers face the following financial risks:

Overdraft/Bank Fee Risk: This type of behaviour makes it very difficult to keep track of how much money you are spending, and how much money you have left after all the small transactions are complete. The fees for this can be hefty: simply being $1 short on a debit transaction can slam you with a $40 NSF fee.

Credit Card Risk: A consumer afflicted with I Deserve may be inclined to put a multitude of small purchases on credit. Again, small purchases in different amounts are hard to keep track of, and add up quickly. At the end of the month, these consumers may not be able to pay off the total of their small, frequent purchases, thus increasing their consumer debt.

Acceptibility Risk: Many small purchases are incorrectly identified as needs rather than as wants (cigarettes, alcohol, daily drink from the vending machine, etc…). In addition, consumers of this kind can easily hide their purchasing behaviours: it’s socially acceptible to visit starbucks everyday (it is unacceptable to purchase expensive electronics every day). Smaller purchases are also easier to hide, consciously or unconsciously, from other people, despite the fact that they can add up to be a substancial amount .

So how do you combat the I Deserve mentality?

1. Recognize it! Ask yourself why you’re buying what you’re buying. You may want it, but do you really need a new TV? Are you buying that latte because you’re thirsty or because it’s simply you’re reward? If you don’t understand why you’re buying something (ie: if you just feel compelled to for some reason), wait 24 hours, and see if you still feel the same way.
2. Change it! YOU need to break the habit of buying something simply because you feel you deserve it. The I Deserve mentality exists for a reason; we all have psychological needs which we think certain products can fulfill. While this can on rare occasions be the case, the majority of the time it’s likely we’re simply stuck in a routine. We are used to “treating” ourselves, so we treat ourselves. Think about it: will that new car really make your job les stressful? Will you suddenly be less tired if you buy that DVD?
3. Plan it! Everything in moderation: there’s nothing wrong with treating yourself if you don’t go overboard. For example: when I saw how much money I was wasting buying a drink every day, I simply cut my consumption back to one bottle, and refilled it with water the rest of the week. My thirst was slaked and I’m going to be 990 dollars richer! Instead of the daily latte, why not plan a weekly coffee date with some friends? Set a day every month to treat yourself, give yourself a budget, and know that on that day, you’ll be taking a little time for yourself.

Now it’s your turn! Do you know anyone afflicted with the “I Deserve” mentality? Have you ever found yourself making these kinds of purchases? What would you tell someone with these kinds of spending behaviours? Leave a comment and let us know!

While researching my next opponent for the PF Challenge, Gather Little By Little, I recently found a great article he wrote about saving for Christmas which basically says the following:

Any holiday that requires gift giving (Christmas, Birthdays, etc…), is an expense, and it can be treated just as any other purchase you’d have to save up for. So why, instead of simply hoping I’ll have the money for Christmas come Decemeber, why am I not putting a little bit of money aside every month?

It’s like starting an emergency fund, for PRESENTS!

Every month you put a little bit aside (say $50-$100 per month), and by the time christmas, or your anniversary, or that birthday you forgot (=ahem…=) rolls around, you’ve got a nice little gift giving budget just waiting for you!

There’s an easy way to set this up too: I am using ING Direct for my emergency fund at the moment. I like the automatic withdrawls from my bank, and I like the ease of use (I make no money from recommending them or directing readers to ING). It can, however, take some time to transfer money OUT of your ING Direct account, so if you have emergencies that you won’t be able to put on a credit card for a short period, you might want to consider another bank for your emergency fund.

Anyhoo, log into your ING Direct account. If you don’t have an ING Direct account, you can get one here.

Once you’ve logged into your ING account, under your existing account, click on “Open New Account” (highlighted in blue above). Click on Savings Accounts (highlighted in blue below), as you will be opening a new saving account for your gift fund.

Here you can give your new account a name. I named mine “Christmas” and started by transferring $25.00 from another account. You will have to select the account from which you wish to transfer funds.

Read the terms and conditions, and if you agree, indicate this and click GO! You should see a confirmation screen resembling something like this:

And there you have it! You’ve just created new account specifically set up for your Christmas/Birthday/Gift Giving fund! Remember to set up an automatic savings program for that account that automatically transfers a little bit of money to your new Gift Giving account every month.

But what about you guys? What has your experience been with saving for Christmas or other gift giving occasions?

Download BTG’s “The Grocery List” Word Template

Do you find yourself over spending when you buy food?

I know I did, which is why I sat myself down one day and made a promise that when I went grocery shopping, I would make a list and buy only what was on that list. No more impulsive food shopping for me!

Hand made lists didn’t really work for me, it takes time and effort to write one out, and who wants to do that? The solution to this problem? A printable grocery list created by BTG that you only have to change once (or not at all if you share our tastes in food!), and where all you have to do is check off the food items you need to purchase.

Below is a screenshot of the actual list. The whole list is a compatible Microsoft Word document, so you can change or add as much or as little as you like.

Download BTG’s “The Grocery List” Word Template

Download BTG’s “Where’s My Money” Excel Budget Template

New and improved in verison 1.1 (click the link for more information about v.1.1, any link on any page will automatically download the latest version of the template): Ability to input and calculate net monthly income from weekly paychecks; ability to calculate specific categories as % of net monthly income (ex: housing, food, savings, etc…)

Do you ever have the feeling that you have no idea where your money goes?

You know you’re spending it, but you just can’t remember where, or when, or how much, right?

Well look no further! The BTG “Where’s My Money” excel budget template was created to help solve just that problem.

There are 6 worksheets in this excel file (you may have to scroll to see them all). They are as follows:

1) Disclaimer: Please read this first, as it contains necessary information as to how to use the template.

2) Fixed Expenses: Fixed expenses are expenses that you must pay. This category includes housing/transportation costs, insurance costs, utilities, subscriptions, and debt repayment.

3) Purchases: this worksheet is where all your VARIABLE expenses will go. Variable expenses include food and anything you buy that does not meet the criteria of a fixed expense (ex: hobby spending, late fees, restaurants, clothing etc…). There is a space for you to input where you purchased the item, so that at the end of the month you can check and see if you spend a disproportionate amount of your income on any one category or store.

4) Savings: This worksheet allows you to track how much you are putting away each month for various categories of saving and investing. The easiest way to ensure you are saving/ for your emergency fund or for extravagancies is to make automatic deposits (click here for more information). This can also be done for investment accounts, depending on the account.

5) Summary: gives you the totals in each category (ex: fixed expenses) and sub category (ex: housing). This worksheet will also tell you what percentage of your income is being spent in each category, and the total amount of money you have spent. The picture below is part of the summary.

6) Under-Over: tells you, based on your Net Monthly Income (after tax) whether or not you are under budget or over budget in a given month, and by how much.

Download BTG’s “Where’s My Money” Excel Budget Template!