Wednesday, October 13, 2010

Spend Spend Spend

Sorry, this post is long overdue!

As I was saying in Budgeting is as easy as Live, Spend, Save, you should budget 1/4 of your paycheck to spend, spend, spend as you please.

I budget my spending by category, but Jay budgets his spending by week (which I will get to).

For simplicity purposes, let's pretend I make $1,000 every other week or $2,000 a month. According to my Live post, $1,000 would go to living. This means I have $500 to spend as I please.

Common line items and amounts (based on $500) for my spending include:

Jay ($50) - I feel like this category is a must for any relationship. Most months, this category would stay right around $50 and is designated for anytime I take him out or buy him something special. When we do go out to dinner, I account half of the meal toward his line item. For Holiday months I usually double (or sometimes triple) the amount I budget for this category.

Clothing ($50)
- As a recent graduate my work wardrobe is in constant need of expansion. Some months I go out and buy a lot of clothing and apply the amount I go over to the next month. For clothing and shoes, my rule is to always buy on sale. I actually carry a short list of staples I am looking for so I don't get overwhelmed if I drop into a store. I bought my most recent purchase (Shoes!) because I received a promotional e-mail from DSW and they happened to have my size in clearance shoes that I have been looking for.

Another basic clothing rule I follow is spend your clothing budget based on your time spent. If you sleep approximately 8 hours a day then you have 112 waking hours to work with. With my commute and lunch break, I spend about 45% of my week in work clothes. I workout daily for about 1.5 hours, which equals about 10% of my time. That leaves 45% that I spend out and about DC, cooking, cleaning, showering etc. Realistically, I only dress up for myself 25% of the time. Since I spend the majority of my time at work, I spend the majority of my clothes budget on work clothes. And, when I spend money clothes I try to buy versatile work clothes that could also be the perfect Saturday outfit. Rarely do I buy a shirt that is strictly to go out on the town in. Realize, I am a recent college graduate, so I have a lot of "going-out" and casual clothes. The point, spend your clothing money based on where you spend your time!

Gifts ($25) - I always budget about $25 a month to buy other people things. This money could be spent to send someone flowers, to buy a friend a birthday gift or for charity. I like to pick up Christmas gifts throughout the year because it spreads out the financial impact and the best gifts are found randomly. For Holiday months, this category obviously quadruples, if not more, depending on what gifts I picked up throughout the year.

Vacations ($125) - aka weekends. Jay and I travel a lot! Therefore I need a separate category for vacations. I usually try to further break down this category by vacation. Luckily, we tend to travel to visit friends and family, keeping our accommodation budget next to nothing.

Restaurants & Drinks ($100) - This category includes anytime I go to Happy Hour, buy a coffee at work, go out to dinner or lunch etc. In the past, I would also had a coffee category. I have cut that line item our of my budget because I really only buy a coffee every week or two if that. You can even cut this budget down more, but I like keeping it broad.

Miscellaneous ($150) - This is where everything else falls. Recently, this budget has included races that I am running, museum tickets, concert tickets etc.

Well I think that is enough for you to digest for now. Sometime in the next few weeks I will explain how Jay budgets his spending money.

Almost a week until the 10 miler! I ran a solid 3 miles this morning and I am returning to my favorite yoga class this evening!

How do you budget your spending money?