Chunk Your Budget
Before we get started, let’s clarify. I said chunk, folks. As in “small-to-medium pieces of something”. I did NOT say CHUCK as in “to throw away”. Now that we’ve got that straight, let’s talk about what I mean when I say “chunk your budget”. [Of course you know we're talking about our budget for our trip to Japan, right? Right.]
Budgeting and saving for Japan can be a tricky business so we want to give ourselves as much time as we can. This isn’t always possible but the more time we give ourselves, the more efficient we can be in putting away funds for our awesome adventure. Prime saving time: 6 months to a year. Average time we give ourselves: 6 weeks - 3 months. Keep this is mind.
Now, let’s talk about chunking. When we sit down to eat a meal, how many of us dump the enitre plate down our throats and call it a day? I have to admit there have been times when I wanted to do that, but it’s impossible, right? Instead, we take several small bites at a time and we keep doing that until the deed is done. Same concept with your budget! Instead of thinking in terms of the entire amount of money we’ll need, breaking it down into smaller pieces makes it easier to digest. (Unless you’re Bill Gates or P.Diddy or somebody like that who has money to throw around like water).
The whole concept of “chunking” is to think in real, tangible terms of your trip. Let’s say you sit down to figure out your finances and end up with a figure of $5000.00 for a 3-week trip. Let’s also say you have 5 months to get it all together. Instinctively, most of us would say “I need to save $1000.00 each month for the next 5 months in order to go to Japan”. [Insert ANNOYING BUZZER sound here]. While this is a very feasible plan and would probably work for some, for the majority of us a goal-oriented budget is probably easier to manage.
In the above-referenced example with the above-referenced sample budget, let’s decide we’re paid weekly and we’re going to save $250.00/week in order to come up with $1000.00/month. Instead of treating that number, $1000, as a random variable, we’ll think about it terms of what our savings will actually purchase that month or week.
First, break out some envelopes and mark each one with a category from your budget (”airfare”, “passport”, “Meals”, etc). Under each category name, write in the amount you need to save. Starting with the purchases you need to make first, start saving. At the end of week#1, place $250.00 in the “airfare” envelope and mark the remaining balance. Pat yourself on the back because instead of saving $250.00 you are now halfway to your plane ticket. At the end of week #2 place $250.00 in the “airfare” envelope and then do a happy dance because instead of saving $500.00 you just (technically) bought your plane ticket. Mark the envelope “paid” and bask in the glow of a small success.
At the end of week #3, place $100.00 in the “passport” envelope and mark it paid. Place the remaining amount ($150.00) in the “transportation” envelope and mark the remaining balance. Do another happy little jig because you’ve just paid for your passport and 1/2 of your transportation costs.
At the end of week #4 place $150.00 in the “transportation” envelope, mark it paid then sing a little song. Place the remaining $100.00 in the “meals” envelope and think to yourself, “I just paid for a few days worth of meals”. Shall I go on? Sure… one more…
At the end of week #5 place $200.00 in the “hotel” envelope and $50.00 in the “meals” envelope. Stop, quiet down, contemplate. You just bought another day’s worth of meals and 2 days worth of hotel stay.
While this may seem a little childish to handle money in this fashion, remember it’s as much how we think about the things we do, as how we actually do them. We are more likely to succeed in reaching small goals that lead to a big finish than if we were to just try skip to the finish line. The advantage of chunking your budget is that it keeps success on your mind and within your reach. It also decreases the chances that you will accidentally blow your budget. Why? Because you are less likely to take an action that will undo your accomplishment!
Once you mark that budget item -that envelope- “PAID” and you do your happy dance, and sing your song, there’s no way in the world you’re going to take money out of that envelope to indulge in a shoe sale at Shoe Barn or buy a Nintendo DSi because you only have a DS Lite and your friend Joe just got one. It’s the mentality of “chunking” that keeps us on the fast track to success.
Soooo…get on out there, get your envelopes, set your budget and get to saving!!!
* * * * * Disclaimers & Such* * * * *
The “chunky” budget is not the only way to go when setting about financing your trip. It’s a system that seems to work well for me. I’ve actually graduated from money in envelopes to setting aside a particular credit/debit card or account specifically for my trip and outlining my weekly or monthly savings in an Excel spreadsheet. I have to say, however, it’s easier to do the happy dance when I’m holding an envelope full of money than it is just seeing a cell in my spreadsheet go “green” (which is what happens when that budget item has been met).
