The Art of Spending

One of the most important takeaways about personal finance is this: It's personal. Sure, there are some general guidelines that work for most people in most situations, but the amazing thing about it is that you can manipulate your financial plan, set goals, write a budget, and save for your own life based on whatever works best for you.

All it comes down to is some awareness of your finances, your spending habits, and your spending triggers.

One thing I love about personal finance too is that it isn't static. As your situation (income, expenses, goals) changes, your budget changes. Or, it should. "Budget" doesn't mean limitation. A lot of people hear the b-word and they thing it is synonymous with tightened pursestrings and scraping the bottom of the bargain barrel. It doesn't have to be. Writing a budget is simply how you give each dollar you own a home. It's management.

So yesterday, I shared the non-negotiable part of my budget. The part that comes first, the part that changes minimally—if at all—month-to-month. But here's where the fun part begins: personal spending.

If you remember from last year, I used to keep this portion of the budget categorized like crazy. Here's the reason: I was still not that great at curbing impulse spending, or remembering my budget when out shopping. In the last year, I've come to grips with the fact that I really don't enjoy shopping (though I love Target, but that's a different kind of thing). And even moreso, I don't really enjoy spending money.

Here's what my personal spending budget looks like now:
And here's how it gets made:

1. I look at my calendar for the month and calculate what I have planned and what those plans will cost me. Birthdays? More in gifts and entertainment. Travel? More in gas and EZ-Pass, less in groceries. Need to buy an outfit for an event? (Rarely do I make a special purchase like this.) More goes to personal.

2. I look at my shopping lists. I keep a list of what I'm running out of or what needs replacing. These things are pretty much all that I buy. I don't like clutter, I don't like clothes shopping. I really just buy what I need to replenish (shampoo, dish soap, mascara, etc.) and replace (running shoes, worn-out clothing). 

3. I think about treating myself. Sometimes I'll pad my Personal budget a little bit and let myself buy a new nail polish. Or I'll leave extra room in General Expense and give myself permission to buy a book, if I want. (This sounds contradictory to #2, but life is about the small joys.) At the end of the winter, I'll get my car washed. 

Writing in the budget is the easy part. I do these calculations and usually start filling in my budget numbers about halfway through the previous month and adjusting as things come up, plans get made, invites get received, and products run out. By the first of the month, it's usually such a relief that my budget has finally turned over and I can start fresh!

And here's how I (do my very best, but sometimes fail to) stick to my budget:

1. I track my spending. Listen, your budget is useless if you don't track your spending. I use a very simple, clean, no-frills iPhone app called iSpending, and I've been using it since 2013. It's perfect, and it's free. All I do in it is log my pennies in and my pennies out. (Side note: As Michael pointed out yesterday, I don't have debt. I do use credit cards though, for absolutely everything. At the risk of this becoming a personal finance blog [it won't], would you want to see a post on how I use credit cards and how they factor into my budget/tracking? I fear it's too much for this post.)

Tracking spending means I need to come face-to-face with what I do with my money twice, or even three times: Once when I buy something, again when I put it into iSpending (takes 5 seconds), and again when I put that figure into the spreadsheet and see the calculation made. There are only so many times where you can think to yourself "How the hell did I just spend $240 in Target and have no idea what I bought?" before you become a bit more discriminate in your spending.

2. I budget in fun and enjoyment. There's no planet in which I can have a $0 entertainment budget. Sure, there's plenty to do for free. But my friends aren't all like me, and sometimes if I want to see them on a Friday night, I gotta go to the bar. (Which I also, in fact, have been known to enjoy.) Sometimes, I swear, a new nail polish will make me ridiculously happy. For a while. I can't buy five a month, but I can buy a new one every couple of months.

3. I make myself think it over. I never, ever checkout of online shopping without leaving the item(s) in my cart for a day or two. This has saved me hundreds of dollars in impulse purchases. And if I want to buy something from a physical store and it's more than a couple bucks, I put it on my list. If, when I'm making my budget for the next month, it's still on that list, I'll consider budgeting for it. Or, I'll see if I can hold off another month because I'm certainly living fine without it now, aren't I? I am.

4. I plan no-spend days and shopping days. It usually happens that on the first weekend of the month, it's time for me to do a good grocery shopping and make a Target run. I try to do these and any other spendy errands on the same day and get a whole lot of spending out of my system. I don't usually go to Target again until the next month (this used to be my biggest problem—weekly trips). I carefully write a list and bring it with me, and almost 100% of the time end up with everything I needed to replenish and restock or replace in one day. It usually feels good to have a few no-spend days after that.  :)

5. I think ahead. I don't really know what my future will look like, but I know I don't want to be surrounded by stuff and unhappy that my goals haven't been met. There's almost always something on the horizon that needs some funding, and if I'm on the fence about a purchase, I weigh it against the thing. Do I really need these running shorts exactly like the three pairs I already have, or is this money better off in my Yoga Teacher Training fund? It's the latter. Do I need to pick up lunch today because I'm feeling too lazy to throw together a salad, or should I put my spare change toward my marathon traveling (to North Carolina) fund? It's, again, the latter.

Of course, I slip up. I make impulse purchases and honestly, usually regret them. I go over budget because I'm having too much fun to close my bar tab, or I feel too happy not to buy a round for my friends. Because personal finance isn't about perfection, and budgeters aren't infallible. But with a budget in place, it's always way easier to see where I stand after a splurge or before a big-ticket purchase. What it comes down to is really simple: budgeting brings freedom.

If you're interested, I've made my budget template (with formulas!) downloadable, in case you'd like to give it a spin. (I'll be happy to help you navigate some of the categories and line items if it's at all confusing!) Remember though, I have a degree in English, not finance, and I don't own any property. I'm not a financial guru. I just know what works for me.

Tell me, what works for you? Or ask me, what hangs you up about personal finance? How do you budget?

Comments

  1. Wow - I am LOVING this template, and have already downloaded it (along with iSpending). I've been wanting to do a more formal budget for awhile and now with my new apartment and all the spending that comes along with it, I have extra incentive. Thanks for giving me such an easy starting point!

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  2. I think it's so great that you know exactly where each penny goes and what you need to spend on! The place I needed to cut back is money spent on food during work...I would buy lunch or breakfast and even though we have great prices in my work cafe it still adds up, so as of this week (i know so much time lol) I have cut it down to only one lunch per week and I'm happy to say that my wallet is feeling good and so am i :) xo, Biana -BlovedBoston

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  3. So I have my own insane spreadsheet but that's mostly to make sure I'm paying my bills on time and with what paycheck. It's WAY more convoluted than it needs to be, but at least my bills are paid. The trouble comes in AFTER I've paid the bills. Which is where I think you're spreadsheet will be PERFECT ! Working on toning down my impulse buying and limiting my trips to target (what IS IT with that store ?!) are going to be my biggest hurdles in becoming better with my finances. But making sure I have a decent chunk of change for maybe a place with a yard when my lease is up/race entry fees are trumping the sweaters-that-look-like-all-my-other-sweaters-just-newer urges. ALSO FUN FACT ! Sometimes when you leave online purchases in your cart but have already entered your email, they will give you coupons as incentives to check out !

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  4. I really like how you have your chart set up. I have a budget, but it just has broad categories and completely ignores my random spending. I might have better luck if I did what you're talking about and plan my purchases for the month ahead of time. Otherwise I buy, never bother to track, and don't fully comprehend why my budget was blown every month.

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  5. I use credit cards almost exclusively too. I have the budget and I budget using last month's income so I know exactly how many dollars I have and where they go. I use YNAB to adjust categories as I go, but when it's dwindling down the spending has to stop. Makes using credit cards as reliable as using cash or debit.
    I LOLed at Lazy Food. Ain't that the truth?! I call it 'eating out' but that's just what it is. Lazy food.
    Another thing as far as planning ahead is planning for the yearly or quarterly costs. I have renew my law license yearly and I get smack with that $400 charge right at Christmas time. If I don't prepare, I'm screwed. Same with the yearly vet bill, John's 6 month car insurance payments, etc. I figure out the yearly cost, divide by 12, and put that in my budget each month.

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  6. Very interesting post! I totally would like to read more about credit cards, of course.
    I am still kind of bad with impulse shopping. I'm like 50% better but I need to get to 90 or 100% better. Part of my shopping ban is buying lunch which I am horrible at (Jimmy Johns is so easy, and they deliver but it's over $10 each time!) but I am going on 9 days today which is seriously a record for me. I do the same thing as you, remind myself what is more important - eating lunch, buying this or that piece of clothing, or paying off my cards, putting in savings etc. It's less fun, but it will be even less fun when all my cards are maxed out again and I can't travel, so it's worth it.
    I meant to say this yesterday, love the idea of no spending days. Even though I am not shopping, I'm still spending - bills, petrol, groceries etc. I'd love to do a no spend day.

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  7. A sure sign of growing up - budgeting posts make me excited. It's nice to see other peoples' way of doing it. Obviously, totally interested in the credit card post. Once mine are paid down to reasonable balances ($3G b/w the 2) I'd like to treat them as charge cards since it will keep using them to a minimum.

    I also like that you're super detailed with your "personal spending". I have a few categories, but I should probably have more to account for the things I enjoy doing, like cooking classes.

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  8. If I go online in search of something specific (like this morning, when I had a list of clothes to buy for our next vacation), I find it and make sure I'm getting the best deal and then I buy it. I don't dilly dally on things I know I need or when I know for sure I want something. To limit impulse buying, I don't just look around for stuff to buy. I only go with intention when I have something in particular I need.

    I do like to shop for certain things and I always spend freely on vacation so I plan for those things in my budget and pad certain areas. In fact, I always come home from vacation with money because I pad it so much up front. Then that money goes right back into the vacation fund to replenish it because travel is a big line item for me.

    As discussed yesterday I think, I use credit cards for everything! I love the rewards and the points especially given that we travel a lot.

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  9. I do not use credit cards because I cannot be trusted with them. People who can have my admiration. Our budget used to be killer! It was impeccable. Lately, though, it's a big old hot mess. It's a matter of laziness on our part, nothing else, and we know we need to do better.

    Of note from your spreadsheet: 1) I love the category "lazy food"; 2) Spotify is a nonnegotiable expense for me, as is Netflix; 3) you are so ridiculously organized it makes me smile.

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  10. I am with Jana, and I don't use credit cards because I can't be trusted with them either. I love how organized you are and this chart breakdown is awesome!!! I need to get better about impulse spending. I am way better than I used to be, but I still have room for improvement. The good news is, if something is more than $20...I really think if I LOVE it and NEED it versus it being a good idea in theory.

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  11. Downloadable budget spreadsheet? Me gustaaaaaa. :)
    I used to use my credit card for everything.. but then it started getting out of control and I couldn't be trusted, so instead I switched to my debit account because when the dollas say no, mama can't go. I could probably get back into it now since my finances have regulated (where they weren't so much before), but I'm always leery of what if I slip?

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  12. Thinking ahead is huge for me. I used to do categories like you have, but apparently I need it broken down even more than that, so now I have a line for every day of the month and when I make my budget, I try to write down every purchase I think I'm going to make every day in that month. Of course that's not perfect, and I'm lucky if I get 70% of my predictions right, but it's the best system for me. I think having it laid out that way helps me see how long a month really is, and really anticipate what's coming up.
    We use credit for everything too, because free money. I just cashed in $500 of statement credit, I mean how do you say no to that?

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  13. Again thanks for this. I sometimes spend way more than I would like. I think now that I plan to buy a home possibly next year, its made me crack down just a tad though. But still, thanks for the tips!

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  14. I think lazy food is my favorite category because that's what ALWAYS gets me. I think I'm just spending a few dollars here and there, but then when I look back over the month it adds up to a lot more than I had realized! This whole thing is encouraging me to be more organized and better at keeping track of my smaller spending- I'm going to have to check out that app!

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