how to budget

The holidays just ended and we’re already bombarded with store emails promoting sales and spring merchandise. As much as I want to head full bore into spring shopping — the dresses! — I need to take a step back and let my bank account breathe. I don’t feel like I’m in a comfortable spot with my finances right now. Holidays aside, a big part of that was buying a house last year and taking a fairly large chunk out of my savings account for things like floor refinishing, paint, hardware, tools, and furniture. I need to get back on track, and taking a month off from nonessential purchasing should help with that.

Let’s be honest, though, this challenge is incredibly difficult for any of us who love fashion and the promise of a spring wardrobe bursting with all of the bright colors, gorgeous prints, and airy fabrics. But, I need to keep my eye on the prize: a healthier financial situation. Here are seven strategies that I’m employing to keep my spending in check this month:

1 – Remember the bigger picture. Going from December, a month of expected overindulgence, to a pared down thirty-one days isn’t the easiest. Keeping the bigger picture in mind helps to remember why you’re doing this in the first place. Do you need to pay off credit card debit? Pad your bank account? Reduce the stress of having too much stuff? Whenever you feel deprived of being able to buy something unnecessary, remember what you’re working toward.

2 – Be grateful for what you already have. You know that closet full of fun things you love and wear? Yeah, go hang out in there whenever you’re feeling the urge to shop. I’m all too familiar with the feeling of fashion FOMO, but there’s likely an abundance of amazing things in your wardrobe that you should be grateful for. Take time to organize your closet and rediscover old favorites, then challenge yourself to reintroduce them into your weekly rotation or remix them into new outfits. (This same idea also applies to housewares, if that’s your weak spot. Try moving decorations to another room to freshen things up.) At the very least, use this time as a chance to carefully evaluate what you own, what you’d like to get rid of, and what holes exist in your collection.

3 – Wish list everything. I have a private Pinterest board that I use for each sartorial and home item that catches my eye. It’s an easy way to add some breathing room to a potential purchase and make sure it’s something you actually want. (Oftentimes, I find that once I add an item and think about it for a week, the piece has already lost its luster.) There will be a longer cooling off period with an entire month, and there’s a good chance it’ll be on sale next month if you’re still enamored with it.

4 – Practice mindful purchasing habits. If you’re narrowing your purchases to just the essentials for a month, you’re already on track to start employing mindful purchasing habits. It really just comes down to being more aware of what you’re buying, how much money is actually leaving your account (or adding to your credit card balance), how that item will be used, and how you’re feeling when you make that purchase. After this month is up, continue practicing these habits in February with a bit more freedom. Are you shopping out of boredom or do you actually see yourself putting that new item in heavy rotation? If it’s the latter, go for it, as long as you have the money in your account and already earmarked as disposable income. Remember, though, for everything you purchased in the past, you were as excited for that as you are for your upcoming purchase. Make sure it’s really something that will add to your life rather than fulfill an immediate desire.

5 – Try new recipes. Dining out is a huge line item for us. It’s unrealistic for us to cut it out completely, so we’re planning to go out to eat just two or three times this month rather than every weekend. To keep things fun and date-like, we’re planning to try new dinner and cocktail recipes instead of relying on the old standbys. It’ll be cheaper than dining out and great activity to share together.

6 – Explore [free] activities. Check your city’s newspaper and online event calendars to find free activities. If you’re in a mid- to large-sized city, there are typically free festivals or concerts that you could go to. If it’s just too darn cold to leave your house, start a Netflix series you’ve been meaning to watch (I just started The Crown), check out an e-book from the library, or finally try some of those Sephora samples that are piling up in your bathroom cabinet. It’s also a great time to reorganize your closet, kitchen, and bathroom.

7 – Enlist a partner. Whether it’s your significant other or a good friend (IRL or online!), having a partner who is also cutting out unnecessary expenses can help keep you accountable.

I’m hopeful that the challenge will also make this year’s sartorial purchases more rewarding. I’ve been putting a small amount of money aside per paycheck and some blog revenue into a savings account dedicated to the Gucci bag I’ve been daydreaming about. I’m almost there, but splurging on it now would feel irresponsible. I’m working my way toward a 2018 goal of “fewer, better things,” and a financial reset button seems like a good way to reframe my outlook on spending. It’s really easy to caught up in impulse spending, new items, and cheap thrills. Those things add up, and while it’s not to say I won’t partake, I want to become more mindful of doing so.

Let me know if you’d like to join in! I’d love to do a link-up at the end of the month to share our successes and struggles.

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Let’s keep in touch! Instagram / Facebook / Pinterest / Bloglovin’

We all skirt around the issue of money on our blogs and, to be honest, I’ve never really felt comfortable with my budget posts because they don’t accurately reflect how I budget for clothing. So, I thought I’d open the discussion about budgeting to share my strategies and learn your tips for fiscal responsibility.

GOAL SETTING

Before determining what to spend, or even what to save, setting up financial goals is a must. This includes long-term goals (like retirement), paying off debt, and big ticket purchases (think future house, not future handbag). Determine how much you need to accomplish these things and work backward to figure how much you need to put toward your goals annually and then monthly. These are your priority items that you should treat like a monthly bill. I urge you to be realistic about how much you can save each month. If all you can save is $50 per paycheck, it’s better than nothing. Choosing an unrealistic goal will leave you discouraged and unlikely to continue saving. (It should go without saying that paying off credit card debt should be your top priority. And, for goodness sakes, take advantage of your company’s 401(k) plan. It’s free money if they match your contributions.)

SAVING

Now it’s time to save. Without savings, we’d never have enough money for a home, vacation, wedding, or a covetable handbag. I use Capital One 360 to set up various savings accounts (no, this isn’t sponsored). I have a general account that doubles as my emergency fund where I’m working to save up three months of income. I also have a “Europe” savings account, a “Home” account for a future down payment and furnishings for our current place, and a “Splurge” account. Whenever I get paid, I transfer a set amount to each account. I don’t put very much in my “Splurge” account, only $50 per paycheck, but it’s also where blog income and eBay earnings go. The great thing about Capital One 360 is that you can create as many different savings accounts as you want without the need for a minimum balance. You can also name and rename the accounts to remind you of your goals. (I had one when I was saving for my Hermes bracelet. Having the account named as such made made me feel less guilty about spending that kind of cash on a piece of jewelry. Now, I’m starting one for the mini Chloe “Marcie” bag I love so much.) It’s important to put a dollar amount to each of your goals and determine a monthly savings goal to help you get there. It adds a level of urgency that helps to prioritize it when you’re weighing your options between putting that $200 in savings or buying a dress (ahem) that caught your eye.

BUDGETING

To determine my budget, I add the overall expected income for the month and subtract all fixed expenses (rent, student loans, etc.), credit card debt, expected variable expenses (i.e. medical bills for my fractured foot or car repairs), and savings goals. These are the nonnegotiable priority items that must be paid off first. Then, I take the remaining amount and divide that by four to calculate my weekly budget. This is money I use for clothing, dining out, entertainment, gas, and groceries. I found it too overwhelming to set a monthly spending limit for things like groceries. Breaking it down into a week-by-week limit makes it easier for me to manage. I offset any surplus or deficit with money from the surrounding weeks. This is why my monthly clothing budget didn’t really hold up. In the event that I want to splurge, I first supplemented my income with blog revenue or higher than average work commissions, and I cut back on spending in other areas.

For example, here’s where my money went last week. My starting balance is $225:

J.Crew Sweater: $64 (This hasn’t arrived yet. I’ll add the money to this week’s budget if I need to return it.)
Groceries: $84
Dining Out: $11
Home: $17
Gas: $72 (This is unusually high because we drove to my parents’ house last weekend. It’s usually $25-30 per week.)
Misc.: $9

That left me with a deficit of $31.50 that I’ll subtract from this week’s budget. Calculating my spending each week helps me stay on track to address these deficits before they snowball into a larger amount. Left unaddressed, $30 per week turns into $120 that I didn’t account for during the month. That money would be taken back out of savings and I’d lose traction on my long-term goals.

ADDITIONAL STRATEGIES

There are a few additional savvy spending and saving tactics to keep in mind:

Cost Per Wear: This totally comes off as a fashion girl’s hinkey rationalization for a big ticket item, but there’s truth in it. Spending $200 on a dress you’ll wear 10 times comes out to just $20 per wear. A $60 ASOS number that you only wear once isn’t a worthwhile purchase. It’s hard to avoid those cheap thrills, I know, but it’s worth training yourself to spot items you’ll actually get enough use out of. (That said, go for that ASOS dress if you think you’ll wear it as often and the quality will hold up.)
Rewards Credit Cards: Tread lightly with this piece of advice. As long as you’re able to pay off your credit card debt in full every month, go for a credit card with a great rewards program. I have a Capital One Venture card that’s basically like getting cash back to use on travel purchases. If you’re tempted to overspend, stick with cash or your debit card.
Plan Purchases: I have a private Pinterest board where I pin potential purchases. So, when there’s an unexpected Lilly Pulitzer sale, I’m not nearly as tempted to stray from my planned purchases to waste money on something else.
Unroll Promotional Emails: I use Unroll.me to consolidate promotional emails into one email I look at daily. This cuts down on sale temptation tremendously. I also use the service to manage subscriptions to store mailings and unsubscribe from ones I no longer care about. (Is there ever not a sale event at LOFT?!)
Research Purchases: I understand the temptation of a flash sale, but do some research if it’s a brand that multiple retailers carry. Many times you can find the item even cheaper or discover a discount code at another location.

WHAT’S YOUR BUDGET M.O.?

And, if you just want the wallet…

7 Spending Freeze Strategies

Let’s Talk: Budgeting