At the end of January, I made a big contribution to my RRSP (retirement fund), to the point of wiping out my cash savings. My next pay dates were February 6 and 20. For the whole month of February, I played a juggling game with cash flow. I came to realize how much I depended on a “float” of cash savings to get me through cash flow crunches between pay cheques. I talked about it previously here.
I could have contributed less to the RRSP, but I knew my cash flow would improve in a month or two, and I could absorb it.
Only my Internet bill is due mid-month, and the rest of the bills can be paid at month-end, except for ongoing expenses like groceries, and gas for the car. Because I have a high balance mid-month, it appears the money is just sitting there unspent, when in fact, it is completely accounted for, and needed for month-end. It sometimes cries out to me, “Why not order that DVD from Amazon?” or “You should go buy some tall boots at the end-of-season sale!” and I must resist.
The last week of February, I allocated some new planned savings amounts. On February 28, I had paid everything off and was ready to start a new month. I had held back just enough to get me through until my next payday on March 6. I calculated every last dollar. I had $29.75 left and I was going to spend it:
- $7.00 skating
- $10.00 parking fees for work meeting
- $12.75 groceries
I was convinced I had accounted for everything. Well!
Right off the bat I had an expense of $23.15 for my volunteer job. It will be reimbursed to me…in a week or two. It was perhaps fortunate that I couldn’t go to either of my skating sessions this week because of a rearranged work schedule. That left me with $6.60, not enough to cover my parking fees for Tuesday’s meeting. Then, a second off-site meeting was scheduled without notice. My parking fees for both added up to $14.
As you might have guessed, I ended up borrowing against a small stash of cash that was set aside for another purpose. Rather than skipping a weekly grocery shop, we spent $51 on enough essentials to get through a full week (Mar 2-8). It covered fresh produce, dairy, and items for work lunches. Shamefully, I spent another $8 on completely unnecessary, but yummy, snacks. My second work meeting was an important one, so I got a haircut – at my usual cheap spot, for $20, but still. I was sorely tempted to buy a new sweater for the occasion, but held off. So I arrived at payday today, with a negative balance of $86.40.
Why am I sharing this? As you know, I am not on a mandatory tight budget and I had access to additional funds. But this is the first time in many years of budgeting that I made myself accountable for overspending and truly knew what I would have had to do without. The answer: I would have had to put off my volunteer expense for a week, which would have inconvenienced other people who assumed I was covering it. Or, I would have had to spend a couple of hours taking the bus to my work meetings to save the parking fee, which would have eaten into my work day and created big inefficiencies at work (travel time not being productive). Or, more likely, I should have left myself more of a slush fund for such unexpected expenses, and I would have had to create that earlier in the month by cutting back on groceries or savings.
I am ever-so-lucky that this was a virtual exercise for me and not a real one. But it opened my eyes to the experiences of others who really do live from payday to payday, deciding which bills to pay and which to put off, and going without food to cover a school trip or a birthday card.
So for those who must budget down to the penny, especially the day before payday or at month-end, I salute you.