When I linked to my budgeting spreadsheet in an earlier post, I mentioned that I had several color-coded categories. The large majority of these are expenses I can’t or shouldn’t avoid – some are adjustable and some aren’t, but there was only one category of spending that I could completely eliminate if I wanted or needed to, and that’s this one:
All those things are nice, but they aren’t necessities in the same way that gas, groceries, and rent are. However, that doesn’t stop me from wanting things that require spending in those categories; quite a few things that require spending in those categories, in fact. The problem is that wanting all of those things now doesn’t mean I should or can afford to buy them whenever I feel like it, and that’s what led me to my new idea: discretionary expense of the month.
The idea behind this system is that each month I choose one of the categories from that list above as an “area of improvement,” and then do my best to minimize spending in all the other areas to below a certain threshold; I’m thinking maybe $25/month as an absolute maximum for non-area of improvement categories (maybe a bit higher for eating out). This will allow me to get the things that I want or need, but will spread out my overall spending so that I don’t use too much money in a single month. It also means I’ll have to wait on some purchases, so I’ll have extra time to think over the decision.
In practice, for obvious reasons, I’ve decided that this month was a home improvement month since I’ve had to buy so many things for my new apartment. I do have a few other categories over $25, but since I didn’t have this system in place yet I’m going to forgive myself this time. It’s also been an unconventional month because of the move. Next month will probably be for clothing since I’ve lost so much weight and my clothes don’t fit me anymore. Maybe the month after that I’ll decide to travel – I’ll have to wait and see what my wants and needs are when I get there.
Anyway, I’m not 100% certain that this system will work. It has its flaws, of course, including the fact that limiting spending to a single category doesn’t preclude overspending on that category alone. However, I am hoping that this will help me to make smarter purchasing decisions and control my total discretionary spending by putting strict limits on all of the other categories that I didn’t chose for that given month.
We’ll see how it turns out in the months ahead!