How’s the per diem thing going?

Pretty well so far. Thanks for asking! It’s been two weeks since I started living on a per diem budget, and I’ve learned a lot from doing it. I’ve gotten a much better handle on what I spend and what my financial situation is like, but I’ve also learned that my budget could benefit from a little more fine-tuning.

As a commenter of mine pointed out, you don’t actually have to withdraw all the cash in advance; you can just do all the necessary math ahead of time on a piece of paper. In fact, if you keep your money in an interest-bearing account, then it obviously doesn’t make sense to withdraw a bunch of cash and stuff it in an envelope for a month instead of letting it work for you. Thankfully, my chequing account doesn’t pay any interest, but the savings account that I’m putting the excess cash into does.

In fact, some of that money has already made its way into my savings account. As soon as I discovered that my per diem was more than enough, I decided to lower it by ten bucks. If that works out for a while, I might cut it again.

That’s just one example of why a system like this works for me. As I’ve said, I’m not a math wizard; planning out a budget and tracking your spending on paper might not be tough, but for a guy like me, there’s a value in seeing what I’m saving and spending in terms of what is and isn’t left in my wallet. I’m also the sort of person who’s likely to spend less if he can make a game out of it, and physically portioning out the money makes it easier to do that.

Of course, the weight of my wallet doesn’t tell the whole story. I calculated my per diem by subtracting what I’d planned to spend on fixed expenses this month from the amount I expected to earn, and that doesn’t take certain expenses into account. Things like travel arrangements and the ring I just bought didn’t get factored into the monthly budget, just because it didn’t seem appropriate.

In the future, I might treat expenses like these as separate from my “walking around” money; keeping the budget for them in check could be as simple as ensuring that I maintain a minimum balance in my chequing account from month to month, and perhaps even using the per diem budget to pay off any shortages.

I know this isn’t the most exciting topic, but it pays to think about this stuff. In fact, for me, the timing is even better than I thought. I knew a lot of changes were headed my way this month, but there’s a lot going on that I didn’t see coming, and it turns out a pretty big career change might be in the wings. More on that later.

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