This is a post from Brent at Vosa.com. Enjoy!
When I think about this story, I can’t hardly believe it.
I can’t hardly believe that there was a time in my life where I wore the same pair of one month disposable contact lenses for more than two years.
Yes, you read that right. I wore the same pair of disposable contacts for more than 24 times longer than I should have.
The worst part is that I didn’t, and still don’t, have a really good excuse.
I was a year or two into my first job out of college as an engineer designing medical devices. I made a reasonable wage for a second year engineer and I could definitely afford to buy new contacts.
Apparently my priorities were more closely aligned with my savings and investing goals than the health of my eyes because I put off buying a supply of new contact lenses for two long years.
You don’t need to be an optometrist to know that this is a terrible idea. I’m pretty sure I even knew it was a terrible idea at the time and I’m happy to report that my eyes survived my two years of stupidity.
Right after I graduated from college, I consciencely made the decision to become a super saver.
I never calculated the exact percentage of my salary that I was saving at the time, but I was maxing out my 401k and Roth IRA every year. I had built up a healthy sum of money in my Capital One 360 account (which at the time was paying close to 5% interest) and I even had an additional unregistered trading account that I funded with around $20,000.00.
So why wasn’t I willing to spend approximately $200.00 for a new 6 month supply of contact lenses?
Because I had already allocated every dollar I was making towards my savings and investing goals and I had forgot to factor in ongoing expenses like contact lenses.
I was so dedicated to my goals I, apparently, was willing to risk the health of my eyes (yes, the one two that I have) to stay on track.
Looking back, I realize just how lucky I was that I didn’t damage my eyes from wearing the same pair of disposable lenses for so long. I also am able to see the flaws in my budget that I had created to meet my savings and investing goals.
The dangers to my eyes aside, I was doing an excellent job at saving and investing money.
Looking back now, it’s very clear that my budget at the time, has a couple very serious flaws.
The two biggest flaws in my budget were:
1. There was zero flexibility in my budget.
2. I did not plan, and save each month, for larger annual expenses like contact lenses and car insurance.
Because I had assigned a job to every dollar I earned, and had even automated the process, I wasn’t willing to be flexible when larger purchases came up “out of the blue”. I use the quotation marks around “out of the blue” because the second flaw was that I was doing a terrible job at accounting for the semi-annual and annual expenses like new contact lense and car insurance.
I should have known that these expenses were coming and planned for them by setting aside 1/12th of the total cost each month rather than having to pay the lump sum once or twice per year.
If I could turn back the hands of time, I wish I would had known about the very popular YNAB (You Need A Budget) budgeting software because the budgeting method is based around four main rules:
Rule One: Give ever dollar a job
You should tell your money what to do, not the other way around. By planning how you will use each and every dollar of income that hits your account you will be way more likely to actually follow your plan.
You don’t need to stick to the main expense categories when assigning jobs to your dollars. In fact, I’d encourage you to have a “spontaneous category” that you contribute to each month so you’re able to be spontaneous (like booking last minute travel plans) without suffering financial repercussions.
Rule Two: Save For a Rainy Day
This is the rule that would have saved my eyes from having to wear the same pair of contacts for two years. By taking the large but infrequent expenses and dividing the cost up into twelve equal payments you successfully remove the stress associated with coming up with a large lump sum of money to cover a necessary expense. Expenses that you’ll want to account for include things like property tax, vacations, contact lenses (!), car and life insurance, annual subscriptions, etc.
Rule Three: Roll With The Punches
Will there ever be a month where you spend exactly what you’ve budget? The answer will most likely be no as we’re all living real life here where prices of things change on a daily basis. Your gas, groceries and entertainment budgets will vary from month to month no matter how well you plan ahead.
Being able to adapt and be flexible will help you eliminate the feeling of being a failure. Again, I could have really used this rule when I was putting off buying new contacts because I didn’t want to blow my budget.
Rule Four: Live On Last Month’s Income
You want to work your way so you are spending last month’s income this month and this month’s income next month. This should be the bare minimum cushion you work to achieve but definitely don’t stop at one month. Continue to work to have a larger and larger cushion between the month you earn your income and spend it on your expense as this will dramatically increase your financial freedom.
Unfortunately for my eyes, I can’t go back in time and save up for a new supply of contact lenses now that I know the four rules of being a YNABer. Fortunately for you and I, we both now know the rules of being a YNABer and we can learn to live by them to help create our own financial freedom.
YNAB is a very popular and effective budgeting software that gets results. The median YNABer increased their net worth by $200.00 in the first month and by $3,300.00 by the end of the ninth month.
If you too want to start getting your financial house in order I recommend you check out YNAB that normally sells for $60.00 (and is worth way more than that).
If you’re looking to save the $60.00 then click here and enter to win 1 of 10 copies of YNAB that I’m giving away!
This is a guest post by Brent from VOSA. Brent’s a world record holder, inventor, engineer, entrepreneur, world traveler & eternal optimist. You can read more of his writing about personal finance, entrepreneurship and travel at VOSA.com.
Kim’s Comments: I have to admit I had a mini panic attack when I read this title. I’m glad you learned the error of your ways before a cornea fell out of your head!
Pink eye image courtesy of Wikipedia Commons