Why budgeting doesn't work and what you should do instead
Remember when your parents gave you an allowance? You had to make it work. If you spent it all, you couldn't go back and get more so you learned how to make do. There is wisdom in the allowance system that can be applied to our spending as adults.
I hear it time and time again from clients: "I don't feel in control" or "I don't know where my money goes". I've heard it from people who earned what would be considered a poverty wage and from 6 digit high earners. Across the board, many women feel out of control and confused by their own spending. If you’re anything like a lot of my clients, you’ve tried different things to manage your own money more effectively. After all, most people don’t seek out a financial advisor as the first step in their financial journey, but rather as a last resort. You may have used online spending tracking technology or apps only to feel overwhelmed by the setup, frustrated by the errors in categorizing your expenses correctly and overstimulated by the alarms and alerts that inundated your inbox. You may have tried tracking your expenses manually or pored over your account statements to understand where your money was going, but after it all still felt about as much resolution as you do about your other sock that disappeared in the wash. Who knows where it went? You just know you don’t have it anymore… Managing your income and expenses (or cash flow) is the foundation of any financial plan. Check out our workshop this month at New Women Space in Brooklyn: Practical Budgeting for Today's Women to master your magic number that will unlock the power to get a handle on your expenses once and for all. Or take our financial control quiz to gauge how in control of your finances you are. Tips to manage your expenses the BKP way
Ditch obsessive systems to track every penny. Retroactive systems won't get the job done. You need a proactive system that will keep your spending within preconceived limits. It shouldn't be a surprise at the end of the month if you stuck to your budget or not.
Keep a separate account for fixed expenses like bills and Netflix subscriptions and another for variable expenses like groceries, eating out, getting nails done, Lyft, etc.
Put yourself on an allowance for your variable expenses- I've found from working with countless NYC women that you'll need at least $60 a day and more ($70 & up) if living in Manhattan.
