Back when I was 19 I built my first house, well, paid someone else to build it of course. At the time, I thought I was hot shit being only 19 with a brand new house. I was the first house in this neighborhood and the only one to get the rebates they were offering to get people to build so I thought this was an investment. Any new house built should increase the value of my house since I would be the cheapest house on the block. However, the market dropped from under me and it took years to recover from the financial disaster I got myself into. I tried to grow up too fast, I didn't weigh the cons of maxing out my income to pay for this new house.
Fast-forward to today, I'm 31 and wiser. I've made my mistakes and have learned quite a lot from them. Today, I run some projects for my employer (Sencha Inc) and some of my project management skills have spilled over to my personal life such as my personal finances.
When I plan a project, I come up with 4 lists:
- These are features or ideals that are required. Without all of these, I cannot say "I'm ready" for release or even internal testing.
- These are features or ideals that are still required for a GA release but they aren't show stoppers for internal testing. I usually like to have these before a beta release.
- These are completely optional features or ideals but would be great if they made the GA release.
- These are usually ideals of what I don't want. For example, I don't want this user interaction to happen. I don't want bugs :)
If you look at these, they can fit very well in personal finances. Requirements are bills, I have to pay my electricity bill. I have to buy food. Needs are more optional but are still required, for me, I have to pay my TV/internet bill for my job (I work from home). I need to buy new clothes to replace worn out clothes. Wants can be a wide range of nice to haves. It would be nice to have a larger TV or new shoes. I want to take a vacation to a tropical island. Nevers are all those bad things, I never want anything to break. I never want to get sick.
Each month, I know exactly how much money I will make. I know exactly when bills are due. I can budget how much food and gas will cost. So I start cutting slices out for the requirements. I then cut out slices for the needs. Usually the requirements and needs don't take up the whole pie but things happen. Any left over pie, I start prioritizing the wants and cut out slices for them. Anything leftover, gets thrown into a savings as you should always have a savings for a rainy day.
Not everything needs a process but things as important as finances, a plan is needed. Your job is likely affected by your personal life experiences so why not the other way around?