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Can I afford another Croissant?



Kirjoittanut: Emilia Parikka - tiimistä FLIP Solutions.

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Esseen arvioitu lukuaika on 7 minuuttia.

As my exchange period has now come to an end, I have a full picture of managing my finances during that time and am now able to reflect on how well or badly I did with it. I want to share how I managed my finances during the exchange, some mistakes I made and did I eventually figure it all out.

 

After reading an article from Bank of America, budgeting seemed pretty simple to me, just follow the six steps:

 

  1. Calculate your net income
  2. Track your spending
  3. Set realistic goals
  4. Make a plan
  5. Adjust spending to stay on budget
  6. Review your budget regularly

 

According to Bank of America, in the first step you need to calculate all your income, whether it’s steady or irregular. You should consider all after tax income, you’ll be receiving in an x period of time. Second step focuses on following your spending and thinking about all the costs you have, not only the regular costs that are set such as rent and food, but things you might want to buy every once in a while, like going to a café with a friend or buying new clothes. On the third step you should be focusing on creating your financial goals, are you planning to save some for later or is there something you’d like to be able to do during your budgeting period that motivates you to create the budget. Step number four is all about creating the budget: putting down what you are actually going to be spending monthly, how much income you have and what will be saved. (Bank of America, n.d.)

 

I knew I wanted my budget to be flexible as I wanted to be able to live my dream life in Paris without having to worry about money. Beginning my budget creation, I focused on the things I knew I had to pay before and during my exchange. After that I focused on the money, I knew was coming to me and I built on that from things that were very likely to bring me income. This is what my budget looked like:

PICTURE 1: Expenses on Budget Plan

PICTURE 2: Income on Budget Plan

In the pictures you see here, you can see my budget already being on minus, as the one I have taken screenshot from was altered after I found out some things, I had added to my income were not coming true. Bigger problems seem to arise, when even more things needed to be removed from my income plan, here I have highlighted the changes on my budget:

PICTURE 3: Income on Budget Plan

There seemed to also be the issue that I hadn’t calculated into my expenses any of the money I needed to be spending on my everyday life here in Finland before leaving for Paris, so as my Paris budget here seems to be on -3000€s the sum was larger than that. At this point I was almost throwing away the entire dream of going to Paris as I seemed to have failed in the very beginning of ever even trying budgeting. Now afterwards I’m able to see my problems: I wasn’t able to set realistic goal of what I wanted to achieve with the money I had, another problem was the fact that my income was very irregular and not set in stone, as I calculated in work gigs that got cancelled and as an entrepreneur, I had no safety net to fall back on. My third problem was that I did not consider all expenses, for example I totally forgot that I need to spend about 60€s or more every 6 months for birth control pills, things like this that happened regularly, but not monthly slipped my mind while I was making the budget for Paris.

 

Even though the situation seemed bad, I decided to go and trust that things always work out, as for some reason my finances usually sort themselves out. I always laugh at my mom that I seem to find money when I need it the most. In this case I also opted my credit card to 2000€s in case I needed some emergency cash. And off I went to Paris with no worry in mind and spent money like there was no tomorrow. September came and went, and my bank card was more used than a lady of the night. October rolled around and the same thing kept happening, I bought croissants like there was no tomorrow, ate in restaurants like I wasn’t able to cook at home, basically I was spending as if I was the queen of Paris and had an endless finance that the Parisian court would provide.

PICTURE 4: Things on Budget payed before leaving to Paris

In mid-October, I decided to do a little research on how much I had spent and how much I should still have to live my life in Paris till the end or my reign. I kept calculating again and again, going through my bank statements again and again, desperate to find an error in my calculations. I mean there was no way I had spent over 650€s in restaurant and café during September alone, or that my original 500€ budget for “fun money” had gone over by a thousand without me even noticing it. The more I calculated, the more I started to sweat, as it turned out I was no queen with endless bank account. If I kept going at this pace, I would be broke by the end of October or latest mid-November. Could I afford another croissant, was my thought as I stood outside my favorite boulangerie, thinking about my financial situation.

 

I decided to do what Bank of America suggests in their article: step 5 adjust your spending to stay on budget and step 6 review your budget regularly. Bank of America suggest to first look at if there are any ‘wants’ in your budget you could get rid of to balance your budget, or maybe some ‘needs’ that aren’t a necessity. After this you could even try to find things in your fixed costs that could be changed. They want you to remember, that even small savings can add up to big numbers long term. As many things change over time, reviewing your budget regularly is important for you to be able to reach your goals, you might get a raise or have sudden expenses appear. (Bank of America, n.d.)

 

After mid-October financial crisis, I created a new excel to help me see what I was spending and how much money I had to spend. I wanted to keep a closer look at my budget and make sure I would avoid a bigger catastrophe from happening.

PICTURE 5: Budget Plan and tracking of expenses in Paris

Even though my budget kept going on minus, I was positive as I knew some money was going to return to me, like the deposit I made before coming to Paris on my apartment would be returned to me after the exchange period. Another stroke of luck came when I got a message telling, my previous company had given me shares as I worked there and as I had resigned a year ago, I was now getting 1000€s for the investment made for me that I had not known about. (As I said earlier, money just seems to come to me when I need it the most) I checked closely the money I had and made some adjustments to my spending. First: more eating in and less eating out. I banned myself from shopping, because I much rather wished to enjoy the time in Paris through experiences rather than buying new things. November rolled around I was confident in my budget and kept checking it every few weeks.

 

However, when November started to come to an end, I noticed so did my money. Even though money was coming to me, like the investment money and deposit money to name a few, it wasn’t in my account NOW and my credit card was nearly maxed out. I contacted Kela and made some adjustment to my benefits, to get the full one for the month of December, which helped a little. I kept an extra week between my lash appointments to save one 65€s from my Paris budget on my lash expenses and I contacted my mom to get a 500€ loan for the month of December, to make sure my last month in Paris would not be sad and broke.

PICTURE 6: Picture of income on Budget Plan

I ended up leaving Paris with very little money in my account as again, I had not considered the life after Paris at all. Lucky for me the year changed, and I was able to cash in my deposit money and the student loan hit my account again. Now that I’m thinking my time in Paris, I’m very happy I let loose in the beginning and spent money like there was no tomorrow, even as it made me more careful towards the end and even have some moments of struggle with finding ways to pay for things, at least I had enjoyed full heartedly. When you calculate my total spending in Paris, with the amount I spent before leaving it totals to 13100,45€s and if you minus that from the final income I had on my budget plan, I ended up being 3165,09€s on plus with my budget at the end. Ofcource there is 2000€s of credit card debt that needs to be payed, and my debt to my mom has already been payed, but still, I’ll be on the positive over a 500 euros.

 

Even as I cursed before going to Paris to my friend on the phone that making a budget was the biggest mistake, because then I was stressed about money more than ever, but it was the budget that woke me up halfway and the adjusting of budget I made along the way that allowed me to enjoy my exchange in Paris fully to the end. Ofcource I had some help and a lot of luck too, but it was also partly thanks to creating a flexible budget.

Written By: Emilia Parikka

SOURCES:

Bank of America, n.d. Website article, Read: 4.1.2023, https://bettermoneyhabits.bankofamerica.com/en/saving-budgeting/creating-a-budget

 

Comments
  • Veikko Airas

    I love this essay! This could be useful for me as well in my daily life. I had similar challenges during my 2 weeks stay so I can imagine how they are at half a year period 😀

    5.1.2023
  • Kamil Wójcik

    Good essay and a highly underestimated topic. Personal finance and good planning is crucial if we want to aim for long term goals 🙂

    6.1.2023
    • Emilia Parikka

      Thanks 🙂 I totally agree! Especially if thinking about corporate finances, how is one supposed to deal with that, if dealing with their own is not in order?

      6.1.2023
  • Xiaoqing Yang-Pyydysmäki

    Very good essay! It reminds me that I should make a budget as well. Time flies and money goes. Need to control properly:)

    10.1.2023
    • Emilia Parikka

      Thank you! 🙂 Yeah, it’s surprising how fast time goes and the exchange starts and before you know it, all money is gone. Good luck with creating your budget, hope this essay gives some help to that process. 🙂

      11.1.2023
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