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Week 2: Budgeting & Saving
Today’s Easy Financial Task: Give yourself an allowance
How to rock this task:
- Identify the cash expenses on your Money List (ex. groceries, entertainment, grooming, etc.)
- Add your monthly cash expenses up and divide them by four (weeks)
- Set aside that amount as your weekly allowance and use it (preferably as cash)
You should already have a budget (your Money List). Next, identify your cash expenses. These are things that are not bills, utilities or savings. Cash expenses are Items that you can and probably should pay for with cash, like eating out, grooming, groceries, and daily coffees.
HINT: Cash expenses are the expenses left in your Deposit Account from Day 11, Define Your Dollars.
Add up your monthly cash expenses, and then divide the amount by four weeks. This new number is your weekly allowance. Unlike when you were a kid, your weekly allowance isn't just for fun stuff. Use your allowance to also pay for things like gas for your car, groceries, haircuts as well as entertainment.
You can spend your allowance in two ways:
- Leave it in your Deposit Account (see Day 11), and spend it using your debit card
- Withdraw your allowance every week and use it as cash
Cash is still Queen. It is almost always best to pay cash versus a credit or debit card because it reduces your likelihood of overdrafting and keeps you more aware of how much you are actually spending.
There is evidence that shows that consumers spend 18% more on average when using a credit card vs. cash (JW PerkStreet Financial). When you use your debit card or credit card to purchase something, oftentimes the money does not feel real, so you end up spending more. When you pay with cash, you actually see and feel your money leaving your grasp. It is a painful thing sometimes, because with cash, you know your money is going to someone else, therefore prompting you to spend less.
Remember, one of the 1st steps to making lasting change is sharing your goals. Here's your chance...Today I will begin to gain control of my spending with an allowance. Day 13 #LIVERICHERChallenge Click To Tweet
I want to hear from you too. Share how you feel about using "cash" in the comments below & in the LIVE RICHER Forum.
Reach out to me here:
Facebook: The Budgetnista
Private Forum: Dream Catchers : LIVE RICHER
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