Many of us live in blissful ignorance as to what we really spend but an online budget calculator reveals the stark reality, writes ROSEMARY MacCABE
FOR A YEAR, when I was 17, I kept a log of every single penny I spent. It all went into pages in the back of my diary, divided into days, then months.
I worked part-time in our local Spar: by day I made egg mayonnaise sandwiches and baked Cuisine de France bread; by night, I dressed up in clothes I rarely wore and wondered why they were that little bit tighter than they had been a mere six baguettes ago.
At the end of the year I added it up. In one year, at the age of 17, I spent €5,000 on clothes. Suffice it to say, I never kept a log again.
Ignorance is bliss – and denial is a common affliction, according to Frank Conway, director at the Irish Mortgage Corporation (IMC). But no longer will financial woes be swept under the carpet; the time, he says, has come for people to take stock of what they’re spending.
Enter, stage right, IMC’s Budget 360 calculator. “We did a survey a few months back, and one thing we found was that people didn’t know what they were spending,” he says. “And they didn’t know how to budget – just didn’t know where to start. The concept, really, is to get people thinking about it.”
The calculator is not for the faint-hearted, although it starts off nice and easy, like Bambi before the heartbreak. Name, age, occupation, do you smoke . . . ahem. Moving swiftly along.
How much do you spend a month on bills? I feel quietly smug; living with one’s parents brings the stellar advantage of not having to deal with the ESB. (On the other hand, you do have to deal with the parents.) How much do you spend, per month, on clothing?
My fingers hover over the keyboard, a silent threat. Would €200 be too conservative an estimate?
One small comfort is that I’m not alone in my financial ignorance; we have, says Conway, spent long years living on borrowed money. “We’ve had a good run,” he says. “Now we’re back to basics – and there’s nothing wrong with that – but we have to learn to deal with it.”
Back to the survey. I hesitantly tap in €400, recounting several online sprees made under cover of darkness.
Although I haven’t done the maths in a while, I am not unaware that my spending is not, strictly speaking, under control. And the results are not particularly pleasing.
At the end of this imaginary year, I’m €26,000 down – shopping, eating out, paying (minimal) rent and occasionally doing the grocery run (in Aldi, where I spend more money on gimmicks and cheap DVDs than on food).
I have, of course, been what one could term frugal with the truth; in this alternate universe I spend a maximum of €100 a month on alcohol and eat out just twice a week. The only person I’m kidding is myself, though; the beauty of the calculator is that it’s designed to help you.
“A lot of people need help,” says Conway. “If you sit down and use an income-expenditure budgeting tool, it makes you aware of your spending habits.”
Getting to grips with one’s finances is no mean feat. Once you’ve got past the cold sweats (stage one), you’re on to shame (stage two), denial (three), rage (four) and finally, dull, quiet acceptance. That’s stage five, when the budget calculator does its magic and sends you a delightful e-mail, detailing your total annual expenditure: what you’re saving and what (gulp) you’re borrowing.
There’s no denying that most of us need to rethink our spending habits, beginning with some good, old-fashioned honesty. Okay, okay, maybe €500. But not every month, I swear.
