Mom’s Money

It’s Time To Re-Think Your Discretionary Cash

You no doubt have some kind of family budget.  You have an idea of your income and expenses, and hopefully are trying to save a bit each month, too.  However, if your situation has changed in the last few months, have you updated your budget to reflect your family’s needs?

A budget is a living thing.  It should reflect your family’s life.  You’ve already taken a hard look at your fixed expenses and decided what you can do to cut costs on mortgage, rent, heat, lights, water, and insurance.  What else needs to be done?

Once you get comfortable knowing where your fixed expenses are, it’s time to take a look at your discretionary spending, you know, the money that seems to disappear each month.  Yes, you have to feed and clothe your family, but at what cost?

Discretionary spending is the bane of our budget’s existence.  It seems to have a life of its own, apart from the family budget.  That’s not going to work for you as you try to corral your spending.  You will need to set limits, not just track, your discretionary spending.

I’m all for keeping a journal that records money spent each day.  However, that is only a tool.  Finding out where the money is going doesn’t stop the leak.  You will have to set limits, and stick to them if you want your financial future to be secure.  Every dollar you spend needlessly isn’t just THAT dollar lost, it’s the accumulated dollars lost as you try to pay off your interest-burdened debt. 

Here’s what you’ll need to do.  Every dollar needs to be planned.  Start with the bills that need to be paid each month, subtract that from your income and you are left with your discretionary cash.  This is where it gets tough.  This is no longer “discretionary” cash - this cash has fallen into your tight fist.  Plan every single dollar of that cash.

You start with your groceries, gas for the cars, clothing, school necessities, and savings.  Set limits and, if there is anything left, throw it back into savings.  This is the hard truth… there is no wiggle-room in your new family budget.  No one gets “walking around money.”  Yes, you have an emergency fund, but it’s not for a Cafe Latte! 

I challenge you to look at your existing budget and take 10% off the top of each flexible expense you have listed and put that amount in savings.  I guarantee you won’t miss a penny and you’ll be watching your savings grow and feeling a sense of accomplishment, and relief, as you plan for your family’s future.