Thursday, May 3, 2012

Spending Plan

I am so glad I started a blog because it gives me a place to voice my opinion. While I was living at the U of U I had absurd amounts of money and nothing to spend it on. Unlike most students I had few expenses and no debt.
I was so relaxed with no expenses
My school costs were covered by a wonderfully generous scholarship. My room and board were covered by my work as a Residential Advisor. The money I made at student jobs had no purpose. While I had dollars flowing into my bank account, I also had no spending plan. Over the three years that I lived at the U, if I didn't spend any money, I could have saved up over $7000. On average I earned just under $200 a month. I truly had no expenses. Instead I had unplanned wants. Those wants caused me to spend the majority of the money I made. When I kept track of where my money was going, I was SHOCKED! I spent a lot of money eating out and a lot of money on clothes. I don't regret those decisions because it taught me a valuable lesson. I am just grateful I learned that lesson when I was younger and before I got married. So what do I do with my money now?
Residential Advisers: Pam, ME with brown hair, Lisa and Lavender
I have a spending plan! A spending plan sounds so much nicer than a budget. Every month is laid out in an Excel spreadsheet. It has categories for everything I spend money on. I allot myself a reasonable amount in each category and keep track of it weekly. The monthly allotment is based on yearly income minus the amount I want to save. I also have a spreadsheet for my yearly budget. Each month gets adjusted accordingly. For example, the yearly budget for gifts is about $300. If I divided that evenly it would be $25 a month. However, if I spend $25 a month until I get to December, then everyone on my Christmas list will be getting an item from the dollar store. I allot about $100 for gifts in November and $100 in December, leaving $10 each month for the previous months.
Accounting Glasses
Me in my dorky accounting glasses
How did I make my spending plan? First I looked at everything I had spend money on in one month. I based my plan on those numbers. For some things I cut back a lot. I had been spending close to $100 on eating out and that had to stop. I changed my monthly eating out plan to $50. Make sure you plan the necessities first and the wants later. Rent, utilities, insurance, and groceries always get planned first. If I had any debt that would be taken care of with the necessities. The left over money gets divided into the "wants/luxuries" categories.
Girl with a mustache
Fake mustache for Halloween goes in the wants/luxuries category
How do I  keep track of what I spend? First, I only use a debit card. I have direct deposit so I rarely have cash lying around. If I get $20 or less in cash it is usually a gift and I treat it as something extra that I don't have to keep track of. If it is more than $20, even if it is a gift, I put in into my account so I can keep track of it. Some people prefer to only use cash when they budget. They put the amount for each category into an envelope and when it's gone you're out of luck. I have a hard time keeping track of receipts so it's easier for me to use my debit card and look at my account statement later. I would probably save more if I used cash, but I'm not super strict about the amount each month as long as it averages out over the year.

What do I do if there's a hick-up in the spending plan? Usually I readjust. I move money from one category to another. For example, this year I'm spending a lot more on pets than usual because we're getting a dog. I have spent less on clothing and entertainment so some of that money has been moved to cover the additional pet costs. If I didn't have extra in another category I would reevaluate what is most important to me and cut down my spending in less critical areas.

Be realistic when making your plan. Obviously you shouldn't be spending more than you make but don't be overly stingy especially if you haven't had a spending plan before. When I first made my plan I went over quite often. It helped me to divide the month further into a weekly amount, and sometimes even a daily amount. Whenever I wanted to eat out I had to think that I only had $1.66 for the day unless I saved it up for an $11 meal at the end of the week.
All that planning is worth it if you end up with a front yard like this
There is no right or wrong in your spending plan as long as you're paying off debt, saving money, and meeting needs before wants. I am far from rich but my savings plan has allowed me to live free from debt and financial burden with enough extra to fulfill my small wants.

My post today was inspired by this article. What is your savings plan like? If you need any help developing a savings plan or if you have any questions just leave me a comment below.

P.S. Sorry for the poor quality photos. They are all from college and taken with a low quality phone. I should have spent some of my extra money on a camera.


  1. Emily! You are freaking HILARIOUS! I am obsessed with you. This post was so funny as well as informative. My favorite picture is of relaxed Emily, with no expenses. :) I should follow your example. My plan is, when I spend more then I was expected, to remind myself of all the free stuff we got for our wedding and how much money we actually saved, etc, and then I make the purchase guilt-free. We'll see how long that lasts.

    1. Thank you Rachel. I'm glad to have you as a reader.

      I rarely felt guilty when I spent money in college because I justified it by not spending more than I made. I figured that as long as I had money in my account I was doing better than my friends who were racking up credit card debt. I felt a ton of guilt and stupidity when I paid attention to where my money was going. $100 for clothes EVERY MONTH? I couldn't believe it. Even if you don't change your spending habits at all, it's good to figure out where it all goes.

  2. I am so excited you guys are getting a puppy! We lived with a newborn puppy all last summer. It was so fun. It helps my spending when I save to work towards a goal. We want to save for a puppy-one day when we know where we're living we'll get one.

    1. I'm so excited too! I have wanted a puppy for as long as I can remember. I can't believe she'll be here next week. I hope we've prepared well enough. We're excited to see you soon!

  3. I love your mustache picture, Emily! Thank you for the financial advice. The illustrations made it really fun to read. :)

    1. Thank you Abby. That mustache picture is so funny to me! I feel like it matched my hair perfectly. It was the only thing I wore as my Halloween costume that year. People would glance at me thinking I was without a costume and then almost always do a double-take and laugh at my mustache.

  4. Emily, will you show me how to organize my budget?? I desperately need to save money, and I want to see how you make it work.


I would love to hear your thoughts (as long as they are nice)