Congratulations, we've made it to step 3! However, the authors tell us that in terms of where the program will take us, we've just begun. Starting with step 3, we'll be doing more of the work needed to make this program successful. (And here I thought digging out old salaries was hard enough!).
Step 3 isn't about budgeting. Perhaps my favorite part of this chapter is that it starts out by saying that budgets don't work. I know some people are major fans of budgets, but I never could be bothered to do them.
One of my favorite bits of this chapter starts on page 78 of the new edition of YMOYL:
This [program] is not about following our or anyone else's budgets...This is not about swearing at the beginning of each month that you'll do better. This is not about guilt. It's about identifying, for yourself, what you need as opposed to what you want, what purchases or types of purchases actually bring you fulfillment, what represents "enough" to you and what you actually spend money on. Consequently, the success of this program rests on your honesty and integrity.
Step 3: Monthly Tabulation
In Step 3 you will use the information gathered in tracking to see what patterns are emerging. You will establish your own spending categories and create a monthly summary or tabulation of your expenses and income.
This is different from a budget, with its arbitrary estimates of future spending. A monthly tabulation shows what you are actually doing with your money in the present and provides an accurate portrait of your lifestyle and spending patterns.
The practices of Steps 2 and 3 form a foundation for Step 4, where you will learn how to evaluate those patterns with an eye to increasing your fulfillment.
- Discern your unique spending and income categories and subcategories from your daily money log.
- Set up your monthly tabulation.
- Enter all transactions in the appropriate category.
- Total money spent in each category.
- Add up monthly income and expenses. Total your cash and all bank account balances. Apply equation to see how accurate you've been.
- Convert dollars spent in each subcategory into hours of life energy using the real hourly wage you computed in Step 2.
As we enter our third week, I wanted to check in and see how everyone is doing. How is your motivation? What's been your biggest stumbling block in the program so far? Are you still with us for the next six weeks?