Friday, November 25, 2011

Financial Fridays Chapter 4, The Budget

“Complications can be serendipitous.”

“Is that a word?” Mercy took Trent’s proffered arm and slid a glance at his face as she fell into step beside him.

“Absolutely, it was first coined in 1754. It's defined as "the faculty or phenomenon of finding valuable or agreeable things not sought for." Horace Walpole, parliament member and writer, used it in a letter that he wrote to an English friend who was spending time in Italy. Walpole came up with the word after a fairy tale he once read, called The Three Princes of Serendip. As their Highnesses travelled, they were always making discoveries, by accidents and good fortune, things for which they weren’t searching.”

“What does that have to do with anything?” She blinked at him and looked as if she expected him to grow wings and fly away.

“The three princes hail from Serendip, the Persian word for the island nation off the southern tip of India.”

“That’s serendipity, not serendipitous.”

He shrugged and smiled. “If serendipitous is not a word then it should be.”

From my novel Stealing Mercy.

Is it too ironic to have a post about budgets on Black Friday? Good things happen and bad things happen. We try to mitigate the bad things by having an emergency fund in the budget. The good things aren’t in the budget. They are, as my hero Trent Michaels said, serendipitous. And they do happen, but if they happened frequently or as a matter of course, we’d stop finding them serendipitous and a smidge of the joy of the unexpected in life would be less bright, less miraculous. It’s so much better to make a plan, work the plan, take satisfaction in the accomplishment and then wonder in grateful awe when the serendipitous happens--or mourn when the catastrophe comes and wipes out our plan and we have to start over, make a new plan, work a new plan. Either way, serendipity or catastrophe, plans and work are necessary ingredients.

The amazing thing about budgets, or plans, is the same exact principle works for time management (calendars) or healthy lifestyle changes (diets). The best thing about budgets, calendars and diets is that they alleviate guilt. Really. Because when you do what needs to be done, you can spend, eat or do whatever you’d like and enjoy it—without guilt, without pressure, without fear—because you know where you’re going, you have a plan and you’ve already done what needed to be done to work your plan.

And without a plan, without the work, we see the catastrophes, but it’s easy to completely overlook the serendipities—and they happen all the time.

Here’s a sample monthly budget for a young family of four living in Las Vegas. I know that this budget won’t be applicable to everyone, everywhere, but it’s a very real budget of a very real family, which I tweaked by increasing the clothes budget—because I really like clothes. You might want to tweak it by budgeting in your music habit, or your yoga expenses, or whatever makes your life interesting and worth living. You can find a myriad of sample budgets on the internet.

In the upcoming weeks, I’ll be posting on each of the following expenses.

Income 4,000

charity 400
savings 300
debt 200
taxes 330
mortgage 900
food 400
transportation 300
clothes 100
vacation 100
allowance 200
date nights 100
insurances 315
utilities 320

Total Costs 3,965

Income-Expenses +35

Using last week’s exercise (you know the one where you kept track of all your weekly expenses—you did do that, didn’t you?) Make a budget. Be generous and realistic.

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