Do You Know Your Limits?

Do I want that red purse? Should I buy that big screen TV? Do I need this new pair of jeans? Is this smart phone essential to my existence? We all face these questions every day. Sometimes they are easy to answer. (If the jeans make you look amazing and they are on sale. Easy one!) But sometimes, the nagging follow-up question, “Can I afford it?” gets thrown out. That one is so fuzzy it sometimes throws a wet towel on the fun of shopping.

Lately I have been following a couple of bloggers whose message I like: Get Rich Slowly is about living frugally – or at least within our means — in order to eliminate debt and slowly accumulate wealth. It’s also about our mental relationship to money and how the things we buy limit and define us. I’ve also been reading Zen Habits, which is written by the author of “The Power of Less: The Fine Art of Limiting Yourself to the Essentials … in Work and in Life“. Often the message is similar there: We don’t need as much as we think we do.

I like to get a daily dose of that art of frugality message.

I think for women, though, finding exactly where we are on the scale of wanting and not wanting is extra slippery. We often get the job of nurturing. Or maybe it’s gathering? It’s one –or both — of those estrogen-fueled activities anyway. So we often end up providing essentials not only for ourselves but also for the husband who won’t shop and the kids who are too young to shop. We all need shoes on our feet, sweaters when it’s cold, and food in the fridge. And sometimes that smart phones does make it possible to make work mobile so we can be with our kids when they need us instead of being trapped in an office. So where does need end and want start?

I have known a lot of men who deal with this quandary by refusing to buy anything – except under duress. (My husband is one.) But then those men get divorced or find themselves, for some other reason, responsible for making sure the house has heat, the kids have shoes, and everyone eats. Then Mr. Don’t Need It discovers that someone has been buying things all along — even if it wasn’t him. I am frugal. But I also have a stellar shoe collection and can completely understand why a tween girl might need colored hair spray and silly earrings. I know that my son – even when he can’t see it – needs a pair of jeans that fit him because middle school can be brutal for people wearing high waters.

So, back to my original, spanner-in-the-works question. Can I afford it? That question is why I love having a clear budget. I like to be able to look at a ledger that says, in red and black, “You can spend $50 more on clothes this month.” Or “If you buy that gorgeous wheel of Wensleydale you will exceed your grocery budget.” I know these aren’t absolute answers but they are, at least, clear. A good budget provides real limits based on facts rather than slippery issues involving tween self-esteem, the marketing of hair products, and the intoxicating scent of goat cheese.

On a previous Frugal Friday, I covered Quicken Online, which is a free online tool. I like Quicken Online for budgeting because it taps all my accounts, captures every dime I spend, and automatically categorizes everything for me. That leaves little data entry left for me. And it makes it impossible for me to conveniently forget about a daily coffee habit or too many (is that possible?) sushi dinners. I like to drop in at Quicken Online once in a while and see if I’m spending within my budget and meeting my savings goals. It will even send me a text message if I’m about to go over budget on something. (Those reminders of bills coming due are pretty useful, too.) It serves as a speed limit for all things monetary.

If you don’t already have a clear budget, though, it helps to start with goals. It’s good to write them down and get familiar with them before you go all-automatic. As Get Rich Slowly is always telling me, the way we spend money is more about mind-set than math. Setting up a budget isn’t a technical exercise, it’s a mental one. Sometimes you just want a good, simple tool to help you guess at what you spend, see if you are exceeding your income, and set some limits so that you can start living within your means, pay off debt, and start accumulating wealth.

Even though I already use Quicken Online, I took PearBudget.com for a spin. It doesn’t require any bank log-ins or a commitment to putting every expense on a debit card. All you need to know is – approximately – what you earn and what you spend. And you can guess at those. In ten minutes, I answered a few questions about my income, mortgage, heat, water, and other things I think I’ll spend in a year. It was a good mental exercise, reminding me of where I have been and where I am going. And I got a solid working budget out of it. PearBudget makes you enter your own receipts –as opposed to pulling them from bank accounts — so, in my hands anyway, it would not capture everything I spend. But it’s a quick way to get an ongoing answer to that wet-blanket question, “Can I afford that?”