Why is the budget monthly?

Galaxy NGC 2623

Our system of budgeting is pretty arbitrary. I recommend that everyone make a spending plan based on the calendar month. Twelve months a year: twelve plans a year.

Could we do things another way? And are any of them better?

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The arbitrary nature of a month, or does it really matter when you spend?


Last month was a little challenging for me, money-wise. While every month I separate my allotted spending money into categories ($300 for Groceries, $60 for Transportation, etc.), it’s really just a best guess.

The month had a number of expenses (in my Fun/Misc category especially) such that, by mid-month, I was effectively done with that category. And having other expenses squeezed out my Food Out and Groceries categories too.

Because of this, I decided to cut my spending down to the bone for the rest of the month. And by the end of the month, I calculated that I was around $200 over budget. Ugh.

I’ve talked about what to do when you go over budget. It happens.

But it occurred to me, as the last day of the month rolled over into the first of the next, that it felt pretty arbitrary how on one evening, I could feel poor, and then the morning after, I could feel pretty flush.

And if it’s arbitrary, is that a bad thing?

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Your past performance doesn’t guarantee your future results

Water drop splash

The phrase “past performance doesn’t guarantee future results” is ubiquitous in financial sales literature. It has to be; it’s the law.

Having encountered that phrase hundreds or thousands of times so far in my reading over the years, it’s become almost a mantra too.

But as I occupy myself not just with how to help people become more financially free, but also to help people become more actionable and successful in their desired goals, the phrase seems especially relevant.

So forget the money, or at least the money specifically, and let’s think about the phrase in a new way: how it applies to you.

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Past performance is no guarantee of future results, or is it?

Glass Globes

Any time you read any financial prospectus or ad, or watch a commercial about any investment opportunity, or really, ingest any financial media at all, one phrase will always show up in one form or another:

“Past performance is no guarantee of future results”

Vanguard past performance

This is at the bottom of Vanguard’s fund list page. Source

This phrase deserves more scrutiny, I believe. After all, it’s practically the only thing the whole investment world agrees upon.

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Keep a list of bill payment methods

Pocket ledger

So just like with expenses, there are a number of methods which can be used to pay bills. And there are pros and cons to each method.

One of the issues that comes up with bill paying is that you will need to periodically update your payment information. This most often occurs when you get a new card number or your card’s expiration date changes. It can also show up if you change your account number (for example, if you change banks), which is less common but does happen.

These days, with data breaches happening more or less all the time, the most common occurrence is that you will be forced to change your card number.

When any of this happens, and since you have your bills automated (I hope), you are going to need to update every one of your bill payments.

This is no fun. But you can make it easy on yourself if you make a list of all of your bill payment sources.

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What payment method(s) to use for bills

Old bank statement

Choosing your method of payment for things isn’t as straightforward as you might think. That’s why I created a short guide called “How to spend money“.

But I was really just talking about expenses in that post. What about bills?

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Is there someone at the IRS who’s a math lover?

Plant Spiral

WARNING: This post contains math.

I love math. You know this. I think math is one of our world’s ways of expressing beauty. To me, there are few things more pleasing to the eye than a elegant mathematical statement. (People tend to agree on this.)

And so, if for no other reason than we all need more beauty, I want to show you how our effective tax rates are a practical approximation of a beautiful and fundamental mathematical curve.

No, seriously.

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Don’t fear moving to a new tax bracket


Do you know your tax bracket?

I’d say a good number of people do.

But do you know what happens when you jump up to a new tax bracket?

I’d say a good number of people do not.

Tax season is over (unless you pressed the IRS snooze alarm filed an extension), but as your income can change all the time, it’s never a bad time to understand what exactly how tax brackets work.

And if you think it’s a boring topic, I would urge you to reconsider. Anything that has the ability to lop off a significant portion off each and every paycheck you get is probably worth your while to understand, right? Right.

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How much is that cheap thing costing you?


I’m a big fan of purchasing responsibly. I’m not profligate with my spending, but I do feel like it’s important to spend a little extra on certain things that provide a significant return, be it personally or financially.

But I also have learned over time to take a longer view of purchases. It’s not just what something costs now, it’s what something costs over the long term.

We see this most obviously with credit cards or “no money down” schemes. Sure it’s cheap (or free) today, but over the long term it will cost more than if you had just paid for it.

But it’s not just debt. Sometimes we cheap out and it ends up costing us more.

To give an example of that, I give you the New York City umbrella.

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The moment I learned that dollar stores aren’t a good deal

Dollar Store

In 2003, I was living in New York City, working a retail job where I made around $13 an hour. (That’s a $26,000 salary equivalent.) My rent was $675, which meant that I was spending 50% of my take home pay just to live and keep the lights on.

It wasn’t quite “result misery”, as Wilkins Micawber might have put it, but let’s face it, it was kind of dire.

This was a time in my life where the quality of the food I ate wasn’t nearly as important to me as the price. Even if I had cared, I wouldn’t have been able to care; I just didn’t have the money. A typical meal I ate was reheated frozen chicken nuggets on toast with ketchup.

Oh, those were the days.

As you can imagine, I was looking for food deals anywhere I could find them. This is not an easy thing in NYC, I might add. I recall buying three days worth of groceries at a local Gristede’s on a previous visit there, and it cost $65. In 2003 dollars. Ouch.

The dollar store

One day, while on a walk nearby my new place of employment, I spotted a large store called “Jack’s 99 Cents”. It was a dollar store, or rather a dollar superstore.

Jack's 99 Cents

Jack’s 99 Cents. It’s still there, and appears to be thriving.

Now, let me admit my privilege here. I had never been into a dollar store before. A place I worked at in college was replaced by a dollar store, but they weren’t a part of my orbit.

But now, in my first, non-dorm-room experience living away from home, the dollar store immediately called to me. I could buy things for a dollar! I could buy food for a dollar!

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