How’s this for learning to budget?

[Anonymous]

I saved half my pay check for this fortnight and spent half of it on a slate grey cardigan. Is that a good start with budgeting?

[mark000h]

Budgeting is about making a list of monthly expenses and saving enough from your income to cover it and have enough left over for additional surprise expenses. It sounds like you're describing spending 25% of your monthly income on one sweater.

[Asker]

A really nice one.

[slatyb]

That's impossible to say. What's your goal for the next year? Your first goal should be to save a few months of living expenses.

[SteveSmith1985]

I genuinely... don't know if you're joking or not.

[Asker]

I’m not joking.

[SteveSmith1985]

Well then, no that doesn't sound like good budgeting. If you spend half you pay on a shirt. Either that shirt is absurdly expensive; or, you make so little money (no judgement) that there is no way you can afford to spend half of that paycheck on a shirt.

It really depends on what expenses you have. If you have nothing else to pay for, then this is perfectly fine budgeting. But I don't see how this could possibly be good budgeting. What about all your other expenses for the fortnight? Is it all covered by the half of your check that doesn't go to the cardigan?

[Asker]

Yes it is.

[SteveSmith1985]

Then THAT is also a part of your budgeting. The way you subdivided the remaining half of your pay into the various expenses you have for the fortnight (food, rent, entertainment, transportation etc).

Now it sounds like the shirt you're going to buy is irresponsably expensive. (or I'm just not able to figure out how that's not the case).

Ideally, you would allocate a small portion of your pay towards "savings" or if you prefer an "emergency fund". But it's not fair to call something a bad budget because it doesn't include this. But if you want "sound" budgeting advice, you should be putting a small fraction away for savings.

Aside from the savings thing... what's most important is that you have enough money for your expenses (plus ideally for the unexpected shit life throws at you. You don't want to be left totally broke if something goes sideways).

If you can pay all your bills and expenses, then it's actually THAT is actually the bulk of the budgeting you're doing. (figuring how it's divided and that you're accounting for all the different expenses you have).

So it sounds like this shirt is crazy expensive. Like so expensive that nobody could justify spending that much on a shirt. The budgeting part sounds like you did pretty good at (aside from the savings). But it does not sound like a "financially responsable use of your paycheck" despite the successful budgeting. If you're ok with that, then no problem. But the "financially responsable" thing to do would be to save up for something that expensive by putting a portion of your check away earmarked for this purchase. So maybe you do it over 3 paychecks. While putting the remainder in savings.

So the budgeting is fine. But the overall financial soundness of this is not. (unless somehow this is not an absurdly expensive shirt)

[Asker]

It is absurdly expensive. That’s very helpful. Thank you xo

[SteveSmith1985]

Also. High interest debt. If you have a credit card balance, for example. And you're only making minimum payments each month. That actually changes everything. If not. No worries, everything above applies. But not if you've got high interest debt (like a credit card balance)