I did it by using my simple budget formula:
Income minus savings minus necessities minus irregular expenses = discretionary spending.
My discretionary spending, which is how much money I have to spend each month, totalled $796.50. I tracked my expenses on an index card, subtracting each purchase and I have never hated parting with my cash quite as much. Something about writing it down and subtracting each expenditure really made it easy to say no to my credit card.
To apply my simple budget system to your finances fill in the dollar amounts for each of these categories.
Income: (the easiest category if you are salaried)
Savings: $833 (to max out ROTH Ira accounts for Hubby and me)
Necessities: rent, gas, electricity, Internet service, cell phone service, gasoline (Hubby and I each get one full tank a month seeing how I work from home and he commutes on his bike), doctor visits, medicine, gifts and my newspaper subscription to the Sunday NY Times (which is on the chopping block)
Irregular expenses: car insurance, car registration, car repairs, dental visits, Christmas presents, magazine subscriptions, charitable donations, vacations, yoga classes, and oil changes. I totaled what we spent on these categories last year and divided by 12. I automatically deduct this amount from our checking account into a special ING savings account each month.
Discretionary spending: food, clothing, bus fare, entertainment, vitamins, toiletries, meals out, hair cuts, travel, and home maintenance. To see why I put food on the discretionary list, go here.
February was the first month Hubby and I tried this new system and we both had money leftover. (See my card above.) I’m wondering if it will be as easy to get through March. I’m also not sure what to do with the $207.02 I have left over!