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The daily minutia of budgeting

Tightwad is very pleased to be participating in the Women's Money Week, which is all about encouraging women to speak up about money, take control of their finances and reshape their financial futures. This post is part of Women's Money Week 2012. See here for more posts about budgeting.
Budgeting is, in a word, difficult. It seems no matter what your circumstances, budgeting means that you have to deny yourself something you want. Hence, the kickback. Much like dieting, budgeting will only work if it's sustainable... can you repeat this behaviour day after day, week after week, month after month? You have to commit to a budget. But in fact, it's not as hard as you think if you can make some adjustments that you know you can live with.
Consider cutting out your daily latte. Surely the incentive is there... $5 x 7 day = $35, times 52 weeks per year is... $1,820. On coffee! That doesn't take into consideration the bagel, muffin or other goody you get to accompany it, and, let's face it, those breakfast sandwiches are pretty tasty. At any rate, $5 is a pretty conservative estimate for your daily morning coffee run.
Now is when the penny drops (yes, pun intended) when you consider the how $1,820 would compound in a savings. Using an inline compounding calculator, Tightwad figured that at 3.0% interest rate, with no other contributions, $1,820 could grow into $3,313.77 in twenty years. Sobering, certainly.
The good news is, however, that budgeting doesn't have to mean going without. Consider switching from a latte to a tea... for the sake of argument, that's, say, $1.80 x 5 = $9, for a year... $468. BTW using the same metrics in the compounding calculator, the 20 year total came to $852.11. See? You don't have to go without to budget, just adjust your expectations - just a little.


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