A Crash Course in Offensive Budgeting

Photo: iStockPhoto

Wise Bread Picks

• Best Online Savings Accounts
• Best Online Checking Accounts
• Citi Simplicity: 0% APR for 18 months

I live in a suburb of an ever-expanding, sprawling metropolis and yet I often chose to bike through the arteries of the city. I navigate my way over potholes, passed unobservant drivers and pedestrians, and pedal by garbage trucks on two spindly wheels. And I do this all by being an offensive cyclist. My experience of riding in a bike unfriendly city has made me aware of how treating other aspects of my live offensively can pay off, primarily financial budgeting.

What does biking and finances have in common, you might ask. A lot. Risk takers are often more willing to make unwise financial choices. I'm a risk taker that has learned the hard way; budgeting is a necessity, just like wearing a helmet while riding near 45 mph cars.

Pump up the tires and get your helmet out

Before I set off on a bike journey that will span over a mile or so, I check my tires for proper inflation and make sure I leave with my helmet. Both of these actions prevent severe bodily injury.

Similarly, I've learned that having a cushy emergency savings fund comes in handy and prevents serious injury to my monthly finances. Building up that emergency fund needn't be painful; a fund of $500 to $1,000 should suffice. Saving a small portion of your monthly income, anywhere from $25 to $200 a month could potentially fund this account within 18 months. Obviously, the more you can save per month, the faster that ER fund will grow. Emergency funds aren't long term retirement savings or meant for a weekend shopping trip, they are for true emergencies such as a repair of some sort or an unexpected bill.

Choose your path wisely

People often ask me if I ride on the sidewalks or the streets. I'm quite honest and tell them I vary my riding location depending on the traffic and pedestrian patterns on any given street. Streets with too many parked cars and heavy traffic, I choose to ride the sidewalk. I feel more comfortable riding on wide-laned streets with slower-moving vehicles. These choices reduce the risk of getting nailed by a car.

Applying what I know about reducing risk to budgeting, I create a monthly budget at the beginning of the year that helps me allocate some money into long-term savings. Every few months I check my spending against my budget and see where I can improve. My main goal is saving as much money as I can on monthly bills so I have more for future goals. Much of my long-term savings is held in a money-market account that yields a slightly higher APR than brick-and-mortar banks currently offer.

Be cautious at intersections (or crossroads)

The most dangerous road hazard to a bicyclist is in the intersection zone. Cars turning right and left often forget to watch the crosswalk area, where many bicyclists are hovering. What I've learned from these experiences is no one is looking out for you, so you have to be on your toes at all times.

Staying alert is a wise move when it comes to money. Offers arrive in the mail that often seem too good to be true. Credit lenders lure unaware consumers in with low teaser rates only to raise them to exorbitantly high APRs a few months later. This strategy also works great when deciding where to invest your money. Researching banks, interest rates, and investments accounts can pay off. Making your own decisions about investments means you're actively thinking of how best to increase your wealth, instead of your broker's wealth. Previous generations didn't have access to the great resources now available to potential investors at the touch of a keyboard. Take advantage of this database of knowledge and look out for your own investments.

Not everyone can balance their finances as perfectly as a cyclist can balance their bike at a stop light, but taking simple steps towards financial well-being can make life a lot easier and less risky.