5 Essential Steps in Budgeting for a Liveaboard Life
If you’ve been dreaming of a life aboard a sailboat, but haven’t done much to get yourself there, consider the following 5 steps in building and maintaining a budget that can help you achieve your dream. Start today. Remember: You can always make more money, but you can’t make more time.
Define your goal.
How much do you need to save up? What is your timeframe? Will your budget get you to your needed savings amount on time? How can you tweek it over time to squeeze more dollars out of your spending budget? How much will you spend on your sailboat? What amount will you spend monthly when you live on the boat? How much do you want to have leftover when you are done cruising? These are all important factors that you need to consider when building your budget.
Transfer Savings Immediately.
Transfer funds to your savings or brokerage account FIRST every pay period. Before you spend a penny, or pay a single bill. This is the most crucial step in a successful savings plan. Don’t transfer it to a savings account that’s tied to your checking. It will be too easy to transfer back if you overspend. Having a cushion in a savings account is fine for emergencies, but the bulk of the wealth you are building should be further out of reach, and should be working for you as an investment to make you more money.
KISS – Keep It Simple Stupid.
The KISS principle states that most systems work best if they are kept simple rather than made complicated; therefore, simplicity should be a key goal in design and unnecessary complexity should be avoided. How does this apply to budgeting? Don’t be overly detailed in your record keeping. Use broad categories. Include your major bills, and then a few variable spending categories like Food & Supplies, Entertainment, etc. In my personal budget, I have a category called Amazon because we order so much stuff from Amazon. I include all Amazon purchases in that category for simplicity. Eating out and grocery food are combined into one category. If you have a particular issue with spending too much on one thing, break out that one thing and track it, but don’t feel the need to track every expense type imaginable separately.
Ease your way toward minimalism. Reduce your cost of living over time., as you escalate your savings. We are planning to peel off a bigger portion of our salary to our brokerage account every year. As we get closer to our goal, we will downsize on housing, sell a car, begin selling our stuff. We have family living with us who won’t be here in the next 3 years. We won’t need 4 bedrooms. Our food budget will decrease, and our salaries will (hopefully) increase over that timeframe. We will move much closer to the location where we’d like to launch, and at that point, be ready for a small apartment. All of these steps will allow us to save a much larger percentage of our paycheck than we can now.
Update, update, update!
A budget is not intended to set and forget. It is an ongoing activity – an engagement tool to keep you focused. I built our budget to track our expenses every pay period instead of monthly. As we incur expenses, I update the budget numbers with actual spending amounts to capture what really happened, so we can look back and see how our spending is trending over time. Also, this keeps me looking at our savings plan frequently – a great reminder to stick with the plan. When I update the budget to actual expenses for the current pay period, I also make any necessary adjustments to future amounts.
Do you have some budget tips to share? Please leave a comment below!