“Spending Money” is the cash withdrawn and used in the envelope system. At the very, very beginning of gaining control of the green men in my life (primarily the Misters Lincoln, Jackson, and Hamilton—Franklin in my dreams only), I decided to sit down and calculate how much money I was sending out into the world versus how much money was coming to me (this can be a scary and enlightening step but is a necessity). Then I had to be brutally honest with myself about what I was actually using the money for—eating out, bars, haircuts, shopping trips, morning coffee, lunches, etc. After my initial review and consequent revelations, I began budgeting between $100 and $150 for each two week period. If I know I won’t be going out a lot of don’t have anything on my shopping list, I’ll budget $100. Cutting back without emotional or recreational hardship when I can (I know I’m being a tad dramatic here, but missing social events can cause emotional pain, right? Right?!?), enables me to spend more during the weeks that I don’t think my typical budget is big enough because I have “saved up” for it.
Following a realistic system of give and take—give a little in August and September because you know you are going to need to take a little for your vacation in October—will help you curb unnecessary spending. Sometimes (most-times actually, but that’s not a real word) it also brings an awareness that leads you to save, and the saving will feel good instead of impossible! Remember to be honest with yourself about how much cash you actually need to have a good time, and remember that you’re goal is to save or pay off debt so don’t budget more than you need. You might not believe us now, but when you are counting your dollars and change at the end of the month, deciding whether or not to get that new Essie nail color, you will experience the thrill of making it work (do I need to cite Tim Gunn here?), and you will like it–you’ll like it a lot.
DREAM ABOUT IT and then SLEEP ON IT. Trust us.
One of the most difficult parts of managing cash is controlling your impulses. A strategy that we use to maintain motivation and not go on impulsive spending sprees is creating the the Wish List. It can have anything on it—from a new car, to a mattress cover, to some new sunnies. When you create your Wish List, you give yourself a hard copy of all of the things that you need (but don’t need RIGHT NOW!), and when you save up enough spending money, you can start checking some of these things off your list. It’s funny how some of the things you think you need today, lose their allure in a few months when you have saved enough money to truly afford them. Sticking to your spending money is THE HARDEST part of sticking to a budget (it is seriously as hard as being honest about what you record in your food journal—is there really a truthful food journal out there?!?), but it’s the easiest and most controlled way to start getting out of debt!