Budgeting as a way of forced spending

I’m a saver at heart, not a spender. I used to set my budget as $500 per month past my cell phone bill and then beat myself up (slightly) if I spent more than that in a month. So when I moved away from the college life and into the world of full-time employment, one of the ways that I helped myself out of the mentality that spending is bad was by building my budget as a way of forced spending.

I have 24 “fixed” budget items and 34 “variable” budget items, for a total of 58 budget items. My clothing category is broken down into 10 categories: athletic wear, bottoms (jeans, shorts, and skirts), bras, dresses, outerwear (coats), shoes, socks, swimwear, tops, and underwear. I find that it is far easier to set estimated amounts for how much I want to allow myself to spend if I make the item as specific as possible.

Several categories that I was always really bad at spending money on are:

  • Vacations
  • Charitable donations
  • Myself, i.e. trips to the spa
  • New electronics
  • All those things that pop up every few years and dribble funds out of your checking account, e.g. driver licensing, passports (applying for the passport, getting photos taken, and sending it off via registered post), checks, yearly sports league fees, and income tax preparation for the years when my taxes are too complicated to do myself

Now, my checking account is a set of 58 “virtual” accounts for each of my budget items. Some of them are emptied monthly. Some are budgeted monthly, but are emptied yearly or every few years. Some come out haphazardly throughout the year; some are buffers or estimates.

I budget $1.25 per month for my next driver’s license, even though that is about 4 years away. I budget $100 per person (Mom, Dad, sister, and hypothetical or real boyfriend) for 2 presents per year (Christmas and birthday). I don’t always end up spending that much, but it’s nice to have that buffer.

I budget $N per month for charitable donations. I raised that amount from 2010 to 2011 and will probably do so again for 2012. They say that it is more valuable to donate larger amounts to fewer organizations, but I find it interesting finding new, needing organizations and supporting many causes.

I have a separate Vacation fund account at the credit union where I keep my checking account and I deposit $166.67 there every month. I like keeping these funds separate from the rest of my budget items since they tend to accumulate quite a bit and I like seeing that number every time I check my checking account for transactions. Speaking of which, it’s almost time for a vacation – that account has accumulated quite a bit of money at this point!

I have found that keeping a detailed budget like this makes me less likely to beat myself up mentally over spending too much because I know exactly where all of my dollars are going. For many people, 58 budget items is probably far too detailed, but it works great for me!

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5 thoughts on “Budgeting as a way of forced spending

  1. Wow, yeah, we’re just the opposite. I know that no matter what we spend money on, we tend to spend about the same amount each month. In months with a shock, we spend less on discretionary items. If we spend more than X in one month, then we make up for it by spending less the next month. Line items would drive me crazy. Eventually we will need another car (hopefully not for years, as the 6 year old Accent has been pleasantly surprising us) and even that will come out of slush.

    • I have an “Entertainment” category that is probably sort of like your personal allowances and encompasses anything from cash withdrawals to books to movies to dinners/drinks out with friends to random new household things, but not sports (those are separate). I realized it was driving me crazy trying to budget for these things individually, so I just stopped and I’ve been much happier. But for things that I *can* expect, I prefer to just add a line item.

      Overall, I do spend the same amount each month, but I think that your system would drive me crazy because I would worry that I’m going to empty out my checking account before the end of the month. It’s fun learning how other people organize their finances and then trying to determine whether that would work for oneself or not.

      • I keep an extra month’s slush in savings so even if the checking account goes to zero, it’s ok. I then know to even out the next month. (This coming year we’re contributing more to retirement, so we’ll be keeping 2 months slush in savings since we won’t be able to refill the slush fund as quickly as in years past.)

  2. 58 budget categories!? I’m amazed that you can keep track of all that… but kudos to you. I find that I really am a spender at heart. I really wish I don’t like spending, that would make saving so much easier!

    • It does take a bit of effort, but one of my hobbies is organizing stuff (including my money) and I enjoy it! Somehow I doubt I could keep this up when I get married (whenever that will be). With no budget categories, I would chastise myself for spending, so I have to do this, unfortunately.

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