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 in 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 are 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 on 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 vast 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 keep 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 for 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?
“I don’t have an issue with paying my bills, I have an issue with overspending on what’s left over.” So smart!
I like these goals – and you could even give yourself a counter if some of them aren’t working as well as you’d hoped. For instance, if you take your lunch every day, let yourself get a Starbucks drink on Friday – so maybe once a week (or every two weeks) instead of maybe once a month. I’ve found I work best on a “reward” type system.
I like rewards systems as well! I like your thinking on this. I do want to cut down on Starbucks, just because it’s better for my health AND my pocketbook, ha, but I could let myself buy a Kindle book or buy one piece of clothing or something if I hit my monthly goals. Must think about this – thanks!
I think it is so great to get a handle on where you are spending your money. I went through this exact same thing last year when I tried to save more/spend more responsibly. Besides bills like my student loans, my biggest spending categories are Target, food, and clothes shopping. I have not been super successful at cutting down my Target purchases. I am really trying to work on that, but my spending is pretty high there because I tend to get groceries there. I have really cut back on eating out. I usually have one lunch out a week, one coffee at Starbucks a week, and then Phil and I maybe have dinner out every other week (if that). I also completely cut out book buying last year as you know and I have yet to buy a book this year! I have really gotten hooked on the library. I do have to hold off on reading the ‘hot reads’ as a result, but that is ok as there are still 1,000s of books I want to read that are available!
Good luck lady! I know you’ll hit your goals by being so mindful about your spending!!
I think food is going to be one of those categories I have to be so mindful of. I know I can spend less on clothes and Target trips and books, but I don’t really pay too much attention to how much I spend on food. All those little trips add up!
I’m so inspired by your book buying fast! I want to see if I can do that, as well, or at least spend a LOT less than I did this year. It was a bit insane, when I totaled everything up.
Do you have amazon prime? You can get free Kindle Books with that. It’s $80/year but if you limit yourself to those books and the library – then you could end up spending less. There’s a free month trial, so if you don’t like it you can cancel (just remember to set a date otherwise they’ll charge you!).
http://www.amazon.com/gp/feature.html/?docId=1000739811
I actually have a free trial for it now, but in looking around, I don’t think it would be a good investment with the kinds of books I read. I think it’s a great concept and if I used Amazon for more than just Kindle books, I definitely would snatch it up!
I love Target. I do a lot of shopping there, mostly cause it’s where we do a big part of our grocery shopping since ours is a fresh market! I have the Target Debit Card and I LOVE IT; it saves me 5% automatically every single time I shop there. There are no hidden fees and it works like a debit card so just syncs up to my checking account. Also, not sure what you get at Target but be sure to check their coupons on their website that you can print; they usually have some great ones (and they take coupons that aren’t theirs, too). I realize you didn’t ask for this advice but from one Target lover to another, I thought I’d share.
I have cut back on my Target trips and last time I went i bought ONLY WHAT WAS ON THE LIST. THat is huge for me!
I have thought about the Target debit card. It makes more sense than the credit card, as it’s not FREE MONEY. (Ha, see why I shouldn’t have credit cards?!) I’m trying to keep a running list of things I want from Target and then just go there once every two weeks. And staying far, far, far away from the clothes section. 😉
One suggestion that’s helped me is giving myself a limit that’s easy to see. I usually load up $20 on an Amazon card and $25 on a Starbucks card and when I’ve spent that, it’s gone. It helps. You’ve totally got this!
That is a really good tip, Amy! Thanks so much. I am thinking of starting to use a cash budget system for things like food and shopping, but I also think the card idea is useful in giving myself a limit that’s already been paid for.
i spend the most on housing, but that’s a fixed cost. outside of that, probably travel and entertainment.
Food is, undoubtedly, my largest expense. I love to cook, eat out, and enjoy treats. It’s not an out-of-control habit, but definitely a tendency I try to be aware of.
I really like how you broke this down! I’m actually scared to look at my statements. I have avoided them for two years (ugh) and that means I’ve also racked up enormous amount of fees because I’ve ignored changing my plan on my debit card.
I should probably do this with you. I need to find time to sit down and face my money fears!
I think the fact that you have broken it down so you can see where the major (and unnecessary) expenditures are, because once you do that, you are half way there!