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by encoderer
5044 days ago
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Clearly you spent some time on that in the interest of a good discussion so that's fantastic and helpful. It's eye openening to see what some people consider normal costs. For example, I couldn't imagine spending just $5 on EVOO. Even the cheap-but-good labels are more than twice that. But the spirit of my comment comes from this: After years of trying, I finally learned how to budget when I was about 25. One of the most important lessons I learned then is that budgets are often a time when people imagine the life they want and try to prescribe it to themselves instead of taking an honest look at the reality of their behavior. While you included steak and chicken, you didn't include any higher-end proteins (including good steak), nor any luxury items at all really. Nor, of course, any dining. And while it's possible that a person can live to your budget quite happily, it is, I think, more likely that the budget as-is wouldn't be followed. That developer, whose friends easily make in the $120-150k range in SF, are going to want to go to dinner with them. To meet them for lunch. To have a dinner party. Sure, there are exceptions. But I'm interested in the mean. What do you think? |
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Excellent. There are two parts to budgeting, you mention the first one which is understanding where your money is going, the second part is prioritizing where your money should be going. Part of the latter is understanding what is (and what is not) withing your means.
So if you are making $70K and you're hanging out socially with people making twice that, you are going to be at a disadvantage in 'expensive' activities. Someone with $100K in income which is taking home over $1K/month more than you after taxes, might decide they are going to spend $500 a month on track time at the local race track (driving fast is very fun of course) that is way too expensive for someone who is only making $70K. As a person budgeting you always ask "Is this valuable, or is it expensive?" [1] understanding the difference can really help clarify what you want to spend money on.
But lets think about the social aspects for a minute. Young people especially (although it is present across age groups) have a tendency to 'brag' either subtly or not so subtly using money. Called 'conspicuous consumption' back in the day, you can recognize these people right away, they always have the latest tech gadget, or a car that is less than 2 yrs old, or this seasons fashion accessories, etc. Why they are like that varies but how it affects you the $70K earner, and more importantly your budget, is key. You have to resist giving into that way of validating yourself and your friendships and instead actively pursue other paths. So if you're budget is being warped by those kinds of influences you might seek out ways to avoid them. It is tough since nobody likes to say "I can't afford to do that stuff that you are doing every day" even when its the truth. However good friends will figure it out and adapt.
Under no circumstances pretend you are something you aren't, I knew a guy in the dot com days who was pretending to be a lot more well off than he was in order to 'hang out' with some actually wealthy people. He got the bar tab once at one of their events, it was a bit over $12,000. He had to call AmEx to get them to approve it. I personally would not think the access was worth that sort of shock to the budget but recognize different people value different things way more differently than I.
[1] One of the engineers here at the office who has a background in economics introduced me to that phrase and it really captures the essence of budget prioritization.