Last week, I began my little mini-series on one of my “Do the Work” goals for 2013: finances. I feel out-of-control with my spending habits and I knew I wanted to use this year to tackle all those money goals that I’ve put off in years past.
At the end of 2012, I decided I needed to create a strict budget. Come February (hopefully), I will have to figure out a way to include a car payment, car insurance, and weekly gas money to my budget. I also knew I had to create a budget that worked for me and would help me feel in control and on top of my finances, but also allow room for fun and experiences.
The first step in doing this was to sit down with my bank and credit card statements from 2012 and figure out where each and every penny of my money went in 2012. In order for me to create a realistic budget, I had to figure out where my money was going. Aside from bills and paying my mom (for rent/utilities/food), I was able to nail down the major spending categories for me:
- Target. It’s not a surprise that I love Target (who doesn’t?) and I went a little crazy on my spending when my mom and I moved to our new apartment and I had to buy new things for my bathroom and bedroom. Generally, I would hit up Target a few times a month spending anywhere from $30 to $100.
- Amazon – Kindle books. On average, I spent $54 per month on Kindle books. My Kindle habit is a bit out of control and I am actively working on ways to cut down on my spending, such as using the library more and snatching up those free Kindle books when I can. I used to be a library fiend but now that I have a Kindle, I haven’t been in one in probably two years. My library card still works (and I still have my number memorized…) so I just have to be strict with myself! (I do use the library to rent Kindle books, but the selection isn’t fantastic and the waiting lists for popular books is long, long, long!)
- Starbucks. I am not a huge coffee drinker and I never typically crave Starbucks but it is right on my way to work, the line is quick, and it’s just one of those treats I love having. It’s one of those unnecessary expenditures, really, so my plan is to only hit up Starbucks once a month to make it a special treat. My waistline will thank me.
- Salon and spa appointments. This includes monthly pedicures, monthly eyebrow waxes, and bimonthly hair appointments. I have decided to completely cut out pedicures and eyebrow waxes, as both are things I can do at home for cheap. But I just could not give up my hair appointments. I am cutting down on how often I go, but my stylist does amazing things with my hair and I just can’t give this up!
- Weekday lunches. I knew this was one area of my budget I wanted to get in control and I wasn’t shocked to see how much I spent over the year in weekday lunches. I averaged around $70 a month and I’m hoping to cut that average in half this year.
- Clothes and accessories. This is mainly clothes, but also includes money spent at IKEA where I bought a new bed and odds-and-ends for the new apartment in September. I really want to work on this area of my life. For someone who talks about loving minimalism, it isn’t exactly ringing true if I’m spending vasts amounts of money on clothes I don’t actually need. I’m also hoping Project 333 will be a great experience in consumerism and understanding how to minimalize my closet.
- Credit card payments. This is absolutely unnecessary. I actually spent twice as much money with my monthly payments to my credit cards than is the balance on both! That is crazy to me. I am very close to the balance on my last credit card (yay!) and my plan is to cut up my Target credit card and only use my bank credit card for emergencies.
- Vacations. Completely necessary expense! 🙂 I went on three vacations last year: two cruises and a long weekend in Atlanta. For this year, I am planning a fun trip to Washington D.C. in the summer (with bloggers! And you should come! Yes! You! Email me?) and a cruise in the fall and that’s about it for my travel plans. I really want to work on saving and paying off my debt right now, so while I absolutely adore traveling, I need to be smart about what I can afford and keeping my priorities in line.
I actually have very firm goals for each of these categories, for how much I am allowing myself to spend over the course of the year and I plan on checking in on myself on a monthly basis to rehash how I’m spending and what changes I need to make.
What this helped me to see was what areas I struggle with the most when it comes to spending money. I don’t have an issue with paying my bills, I have an issue with overspending on what’s left over. I think it’s a natural problem to have, especially someone just grabbing hold of her financial independence but it’s one I want to nip in the bud quickly. I was able to pinpoint my areas of weakness, and also create a budget around this. I can’t exactly say I am never going to buy a Kindle book or shop at Target or spend money on clothes. I know I’m going to do that, but I want to do it in a more responsible way. By figuring out where I tend to spend the most of my fun money, I was able to create a budget around it that would allow me to pay my bills, save, and still have my own money to play with.
Next week, I’ll break down my budget and show you the fun little spreadsheet I use to calculate everything!
What category do you think you spend the most in?