Confessions of a Spendaholic: Why Creating (and sticking to) Budgets is Easier Than Ever Before

banking

America’s economic situation is dismal. The headlines are depressing, the outlook isn’t good, and Americans are struggling in a sea of unemployment. Despite this, I somehow managed to let my spending spiral out of control. I have finally acknowledged my problem – I was a spendaholic – and thanks to a slew of easy-to-use online tools I have found ways to regain control of my habits.

Now, a slight disclaimer: I didn’t go crazy and accumulate tons of debt on credit cards. I am still relatively debt-free, but when I analyzed my spending habits, I realized that I wasn’t saving as much each month as I could have been. Money that should be going toward my professional and personal development was being spent on… well, that was the problem: I had no idea where my money was going.

It all started when I got my first full-time job. Receiving regular pay checks after being a broke college student for so long made it a little less painful to check my bank account. In fact, those checks made it so much easier that I stopped checking my accounts altogether. I became a spendaholic because I knew the money would be there.

In January, I checked my account and realized that after 4 months of having a job, my financial standing had not changed as much as I’d hoped it would. My savings had little growth and my checking had stayed the same every month.

Then, it hit me: I was living in the moment, and not thinking about my future. I realized that if I continued spending money at the rate I was, I would never save enough to go back to school or buy a car or purchase a home or travel as much as I wanted. Something had to change.

I decided I would sign up for a financial service that tracked and analyzed my spending habits. Many of my friends and co-workers recommended mint.com, and that’s the service I went with. (I’ve also heard great things about expensmoneyr.com.)

I’ve been using mint.com for a week, and I’m hooked. I can go back several months and see where the majority of my money went. It was a brutally honest wake up call – one I desperately needed. Like most young professionals trying to get settled in a new city, most of my money went toward my social life: concerts, movies, eating out, and happy hours.

Using mint.com, I adjusted my budget so I was cutting back on these things. Even with slight changes in each area, I will be saving thousands of dollars this year that can be put toward future investments. Mint.com also sends me alerts when I am getting close to a certain budget, or if large transactions occur in my accounts which helps me easily track my monthly spending.

In this era of economic uncertainty, I decided to reel in my inner spendaholic so I can practice financial responsibility skills that I hope will serve me well as I get further away from the collegiate lifestyle.

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9 thoughts on “Confessions of a Spendaholic: Why Creating (and sticking to) Budgets is Easier Than Ever Before

  1. Oh yeah…. mint.com is a wakeup call. I hate checking it because then I see how much money I really spent on random crap. So I don’t really check it as often as I should. But I do use all the email and text alerts, so I don’t get hit with overdraft fees anymore and I don’t miss any bill deadlines, which is awesome. I think thats probably my favorite feature…

  2. @Nisha – I know, I have the iPhone app and I make sure to check it every morning. It’s very painful at first, especially this month as I adjust to budgets and realize I’m approaching all of them and it’s not even the middle of the month, but I guess that just proves how much I needed it!

    @Tory I was concerned, too, but I read through the privacy and security section and it was reassuring. http://www.mint.com/privacy/ I also have a lot of friends who’ve used the service for quite some time, and are very confident with its procedures.

  3. I agree… It also doesn’t help that the price of things that we “need” to live everyday have also shot up in price. Aside from rent, groceries alone cost nearly twice as much as I allotted for in my budget.

    My boyfriend and I find ourselves watching the dvds we already own and cooking dinners at my apartment versus going out to eat and to the movies.

    It’s really hard to budget at our age, but I believe it’s well worth the savings and the payoff.

  4. Timely post, Meg. I’m a big fan of Mint.com as well, I can’t sing its praises enough – especially for the reasons you outlined above.

    Gen Y’s spending behavior, “living in the moment” is a testament to our fresh and optimistic spirit, but Gen Xers are standing by with smirks that say “Oh, you’ll see.”

    If you’re making three times (ish) as much per year as you were in college (scholarships, stipends etc.) then the savings account and investments should reflect that, right? O_o

    Old timers are fortunate enough to have been around for the era of writing checks, before auto-pay and direct deposit, the era of writing out the math of each transaction as you pay, and before online banking was possible. They balanced and saved just fine.

    Our blessing in this sense is indeed our curse.

  5. @Samantha You make a valid point – the cost for necessities has increased, making it difficult to budget for a social life and save for the future at the same time. I’ve found myself staying in more frequently on the weekends and cooking at home regularly during the week so that I can save more than I have in the past.

    @Alan You’re right – our mentality as a generation as changed dramatically. I have to remind myself that debit and credit cards are in fact real money – because it’s so easy to swipe it, it’s difficult to think about the consequences and how much we’re actually spending on the little things.

    Thanks for your insight, guys!

  6. Hi Meg, you have the coolest blog!

    And today’s topic, geeze, how many ways can you say “timely” on this one?! The mint.com site has been extremely helpful for several friends, it’s remarkable. At the Prepatorium we use a program that we have had in-house a long time, and it is always an eye-opener to look at the “cash” and “misc” categories. But it’s also good for the soul.

    Thanks for popping by, I’ll be back frequently, and look forward to spending tons of time with the blogroll and other links you have.

    Have a splendid Tuesday!
    tp

  7. This is a fantastic idea- and something I’ve definitely been struggling with as well for a while. How will I ever buy a house and stop throwing my money away each month of rent if I can’t save anything? I’m heading over to Mint now… thanks for the advice!

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