As part of debt-reduction/fiscal awareness, everyone tells you to write down everything that you spend for a month or so. I've done that a few times in the past, and used it to arrive at a system that works really well for me. After analyzing my spending patterns, I decided that I can live very comfortably on a budget of $200 per week.
That money is enough to cover groceries, pet food, gas for my car, clothes, coffee, lunches out, movies, books, haircuts, etc. Everything that is not a scheduled monthly or annual expense comes from this fund. I also put whatever is left over when the next Friday arrives into a savings account. When the money is gone, it's gone. I take it out on Friday, and sometimes I've spent it all by Sunday, so then I have a lean week, but I don't take out any more from the bank. Sometimes, I only spend $20 in a week, and I put the remaining $180 in the bank.
This system works for me for several reasons. First off, I'm mostly self-employed (and the college where I teach only pays us three times per semester, so that's just like being on a self-employed schedule), which means I get huge piles of money at times, and then nothing at all at times. Since money burns a hole in my pocket, having this agreement with myself is like getting a regular paycheck, and it's easier to manage. It used to be that if I saw something pretty that I wanted and I had the money in
the bank, I would just get it and deal with being broke later. Now, if I see something I want, I think "well, I've got $200 to live on this week, is it in my budget?"
Secondly, I really don't like the whole writing things down process of spending -- I did it, and I arrived at this figure through that, but this way, I know what I have to spend, and I don't feel guilty if I want a $70 deep tissue massage or if I want to pop down to NYC for the day -- I make those choices knowing it might mean I'll eat beans all week. It gives me a parameter to work with.
Next, all the experts say that we're tighter with cash than with debit. Knowing I have $200 in my wallet makes me feel secure and independent, and I am often quite happy not to spend it. I also like not leaving a transaction trail behind me with debit purchases.
Lastly, it has gotten me to save. $200 per week seems (to me, anyway) like a pretty generous amount of money. Even with the cost of gas so high, I can meet my basic needs on less than $200, so I almost always tuck away at least $20 to put into savings.
Over the summer, I had no income and wasn't able to live on this budget -- I only had $10 to live on some weeks. But I'm solvent again, and am back on my plan. It's nice to be in control of my finances again! I'm amazed at how much free-er I feel now.
