How to Make a Budget (and stick to it!)

Jane Haines is a Community Economic Development (CED) volunteer serving in a pueblo in Atlántico, Colombia.


This seems like a silly article to have to write. One of our main jobs as community economic development volunteers in Colombia is to teach business owners and students how to budget, but learning how to budget our own volunteer stipends can be a challenge in itself.  

After a few months in a row of running out of money (a common citizen might sneer, but we’ve all been there), I decided it was time to start 2019 off right with a sparkly new personal budget. It took several months of trial-and-error and running out of money before I figured out the strategies that work best for Peace Corps budgeting. 

This “how-to” guide is designed to help you tailor your budgeting strategy to the amenities available in your Peace Corps Colombia site. Some sites, for example, have easy access to an ATM, commercial supermarkets, and internet—while others have only a few or none of these things. Considering food and connectivity will be some of your largest and most basic expenses, these elements are critical to maintaining a budget that not only helps you save money, but gives you the flexibility to spend on things to keep you sane happy during your service. 

I’m going to begin with what I did wrong, and why successful Peace Corps budgeting requires a special set of skills and considerations. 

The first mistake I made when learning how to budget was getting way too detailed. I divided up my total income into categories: rent, food, transportation, etc. and allotted a specific dollar amount (or in this case peso amount) to each item. This strategy required me to record everything I spent money on. In the States, this is fine, since we have debit cards and money-tracking apps that can do the work for us. In the cash-based economy of a pueblo, it’s less than ideal. 

After two months of trying to follow this no-leniency, category-based budget, I had a hard time tracking exactly how much money I had in my account month-to-month and how much I was saving. My pen-and-paper calculations were not very accurate and I got frustrated with the whole system.

The category-based budget seems like the most obvious choice, since Peace Corps decides how much we get paid based on the value of our day-to-day necessities. A list of basic items and their average values adds up to the amount that gets dropped into your bank account on a seemingly randomly-selected day of the month. We get paid before the month actually starts, meaning we shouldn’t even be tapping into our fat new paychecks until almost two weeks after they’re deposited. This is all fine and logistically understandable, except that it makes strategic budgeting a nightmare for volunteers. Daily living costs vary greatly between sites, as do large-sum monthly costs of visiting a big city or grocery store. 

For my next go-round, I tried a more cash-friendly approach. I typically visit a nearby city about once a week to grocery shop, drink nice coffee, and hang out in the air-conditioning for an afternoon. Since there is no ATM in my site, I have to make sure I get enough cash before I leave the city to hold me over until the next trip. In the past, I did this haphazardly, withdrawing varying non-time-bound cash amounts from my account. 

The premise of my second budget is simple: I withdraw a lump sum of cash from my account every week. This amount is based on my weekly cash costs in-site, which are relatively modest: going to the gym, traveling to work sites, getting ice cream, and purchasing some pueblo groceries. Once I have this base cash amount, I use it to travel home and sustain myself throughout the week. Sometimes I use all of this amount, and sometimes I use less than half. Whatever is left over at the end of the week is mine to treat myself in the city on the weekend, or add to my savings. It also leaves a little wiggle room to buy more expensive groceries in the city when I need them (peanut butter, olive oil, etc.)

The following are steps you can take to ensure your fixed expenses are accounted for and your weekly cash allowance makes sense for your budget.

1. Withdraw your rent and hide it!

Always take your entire month’s rent out as soon as you get paid. Keep it in a secure place, along with your host family payment calendar. This way, you won’t spend your rent money, and you won’t have to make an extra trip to the nearest ATM (which could be hours away) when your host mom asks you to cough up the cash. This amount should include any extra money you pay for air conditioning or WiFi use. 

2. Consider your fixed costs like WiFi and data.

If you pay for WiFi access in your home or a separate cell phone plan that will also be a recurring charge that you will want to take into account when setting up your initial budget and weekly cash allowance. 

Pro-Tip: In Colombia, you can manage your cell phone plan two ways: pre-paid or post-paid. If you already receive enough minutes and data on your Peace Corps-paid cell phone, you’re good to go! If you require additional data, I recommend starting a post-paid (or “pospago”) plan with a separate sim card. You can cancel the plan anytime, and it will be well worthwhile in the long run when you get easy text reminders to pay your bill online every month. I recommend this strategy if you live in a site without internet access, as you can use the extra data to share with your computer to check email and browse the web (and maybe watch Netflix at the end of the month).

3. Figure out how much cash you have to play with.

Your cash balance will help you determine how much you want to spend in site, and how much you want to save. If you live far away from a city, you may also want to allot an amount for buying grocery items not available in your pueblo. We’ll call this SPECIAL GROCERIES.

TOTAL MONTHLY STIPEND – RENT – CELL PHONE BILL – WIFI BILL – SPECIAL GROCERIES = CASH BALANCE

Pro-Tip: Set up online banking. This will allow you to see the balance in your account without going to an ATM. Since the nearest ATM can be several hours away, this gives you an easy way to check your balance when planning a vacation and checking on reimbursements from the office. You can also use online banking to transfer pesos to other PCVs or pay for program-related costs. 

4. Decide how much cash you’ll allot for in-site expenses each week.

You’ll need to make a rough tally of how much you spend each week, and use trial and error to figure out what is the right weekly cash allowance. Here are some calculations to help you determine you weekly cash allowance and figure out how much you can be saving.

WEEKLY ALLOWANCE X 4 = APPROX. MONTHLY IN-SITE SPENDING

CASH BALANCE – MONTHLY IN-SITE SPENDING = MONTHLY SAVINGS

Pro-Tip: If you choose to use this cash-based system, you really need to commit to paying for everything in cash. Aside from your monthly WiFi or cell phone bill, you should use cash even when you go out to dinner in the city or pay for groceries instead of swiping your card. This way, you can keep track of how much you’re spending without writing it all down. When the cash is gone, you’re out of money! Not only will this strategy help you stick to your budget, it’ll help you make smarter in-the-moment decisions about which splurges are worth the money, since you have limited capital in your pocket.

5. Add up those savings!

Once you’ve determined your monthly savings, you can allot a specific amount you’re willing to spend on your monthly break vacations and subtract that amount as well. I don’t do this because the cost of my monthly breaks varies so much month-to-month depending on where I’m going. 

Pro-Tip: Sometimes you can follow this budget and find that some months your account will still be quite low. Remember to check if you owe any reimbursement forms and get that cash back into your pocket ASAP. And don’t forget that we get paid a stipend, not a paycheck. Chances are that even your long-term savings won’t last that long, and that’s okay. The idea is to make conscious decisions about which luxuries are worth spending on, and to have a plan so you don’t run out of money for the necessities.

That’s it! You’re done! The beauty of this system is that you can set it and forget it. You’ll take out the same amount of cash every week, which will help you make decisions about how to spend using the limited cash in your pocket.

Budgeting this way will take some discipline, especially when you’re tempted to just swipe your debit card when you run out of cash. You will make mistakes—but the point of this budget isn’t to be perfect. The point is to give yourself a reasonable, reliable framework that takes away most of your day-to-day anxieties about money.

The take-away I’ve gained from this exercise has been one of gratitude. Our regular paychecks (even if they do arrive on a different day each month) are a blessing many of our Colombian friends and counterparts cannot count. Even when we run out of money one month, we can be sure our accounts will be replenished the next. We don’t rely on luck, favors or grit to make our pockets full again.

Now, instead of looking with my bank account with dread and yearning for the days when I could spontaneously use cash to fix a bad day, I reflect on my earnings with gratitude for the consistency with which they arrive. So if you’re struggling with money, give this a try! You might learn something about more than just your bank account.

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