I have a confession to make…It’s been over a year since I tracked my household’s expenses. Yes I know better, yes that is horrible, and yes unfortunately, it’s the truth. My boyfriend and I have been living together for about a year and a half. Prior to his “moving in” we tracked both of our expenses and built a household budget that was fair and worked for both of us. We haven’t looked at it since. In fact, I pay all of our household bills and manage the finances for his business. He has NO idea where his money is going either personally or professionally. Trusting guy? Yes. Smart guy? No.
I am not the type of person that would ever misappropriate his money in any way. But what if? What if I was that type of person? What if I died or became incapacitated tomorrow? What if we broke up? He would be completely in the dark about his financial situation. That ends now!
We had to have the “talk” where I laid all of this out for him and explained the importance of him taking at the very least, a moderate interest in his financial situation. We also discussed his current income based on last year’s numbers, his current business expenses, personal expenses, and our household expenses.
If you have this type of situation at home, one person handles the finances while the other sits on the sidelines, I encourage you to end it now.
Here’s how to start:
Track all expenses. Have them track ALL of their expenses, at least to the dollar. This includes convenience store stops, lunches out, and a new pair of socks.
Give a visual. Those not interested in their finances are often overwhelmed by all that goes into managing them. Make it easy to show them where their money is going and what their spending habits are. Plugging my boyfriend’s expenses into a budgeting program that took the results and produced a pretty pie chart worked wonders. He was shocked by his spending in each of the categories and could see there was a tremendous amount of room for improvement.
Set a budget. Since my boyfriend has essentially two different budgets that need to be adhered to this process was slightly more difficult. I started by explaining the income and then subtracting all of the essential expenditures for each. Next I explained, vehemently, the need for savings and how he has a lot of room for improvement in this area. Finally, we addressed the frivolous spending. There were a lot of dollars going to this category and the pie chart really opened his eyes to how much, and where.
Baby steps. Putting someone that is not used to budgeting, on an allowance is a lot to ask, but in this case I felt it was extremely necessary. Instead of using his debit card , he will be given a cash amount each week that can be spent on frivolous spending.
What Constitutes Frivolous Spending?
Here is where a bit of an argument ensued. My idea of frivolous spending is anything outside of basic needs; food, shelter, and clothing. His idea of frivolous spending is buying a new pair of sneakers once a month. So to get us on the same page we went back to the pie chart (a place he feels comfortable) and reviewed the “other” category.
The big reveal showed the below:
$15.00 of food / day outside of the house. (fast food, convenience stops, sandwich from the deli)
$3.42 / day for mid-day Redbull drink
$17.56 / week for local beer distributer or $2.50 / day
$151.00 / month for clothing and or shoes or $5.03 / day
$25 / week for delivery pizza or $3.57 / day
Grand total: $29.52 / day in frivolous spending
The response was, “Wow, I had no idea!” And he is no different than many others including myself. Without tracking expenses regularly you can get yourself into some pretty bad habits.
But, for our household that stops now! We have dubbed our goal for the New Year, “No more frivolous spending!” The voice he says the phrase in is a pouty child-like one that embodies his disdain for taking this goal on. The good news is, he is committed and sees the benefits of banishing all of that frivolous spending.
I mentioned the idea of a cash allowance earlier. This gives him some ability to spend frivolously, but when the money runs out, he knows that’s it. Quitting anything cold turkey is a major challenge and often leads to a relapse. The cash allowance is to prevent this from happening.
I am happy to report the first week and a half has gone well. The “No more frivolous spending” phrase is brought up each time anyone in the house mentions a particular object of desire and makes us all laugh. See finances can be fun!
How do you combat frivolous spending in your house?
All my bills and groceries are charged to my Visa (for bonus points I use to buy a gas card) and my rent is zapped out. I transfer my savings/investments online (I could set it up automatically but I like doing it) on payday. Then on payday, I withdraw my DI (disposable income) for two weeks. That cash covers anything I want to buy for fun. Going out for dinner = DI. New shoes = DI. Haircut = DI. Latest bestseller = DI. I like that my DI is cash because it’s visual, when I see the nice stack of $20 bills disappearing, I can mentally say “whoa!” I don’t even track what I spend. The 2 weeks worth of DI is strictly for spending. There is no guilt associated with DI. DI is strictly for fun!
I also avoid bringing ANY DI to work with me. Yes, my wallet is empty of cash. No temptations! If I have an emergency, I have my credit card but in the 15 years I have been doing this, I’ve never had a true emergency that required me to use my credit card.
A lot of naysays say “I cannot do that” and my response is “well unless you are 97 years old and life is running out, it’s 2 weeks of your life. Are you so delicate a person that you cannot try something different/new for a mere 14 days?” Yeah I can be kinda sarcastic about the whole thing, but the results are great. I have no debt and a big fat bank account.
@Slackerjo I love your approach! I think having the DI cash on hand to spend any way you like is a great way to stay motivated 🙂 I too like to transfer funds to my savings/investments instead of having it done automatically; the process is very motivational. Thanks for sharing!
I always figure “I cannot do that” is really just “I’m not prepared to deny myself anything and have no selfcontrol!” If the nonessentials you are buying are truly where your priorities lie then great. It could be Starbucks or new car smell. Both unecessary, but both perfectly valid choices. Just don’t turn around and whine to me that you can’t afford X. What you really mean is “I could have afforded X, but didn’t evaluate my priorities and decide not to buy A, B and C first.”
Personally I don’t include ANY nonessentials in our spending plan and most weeks we stick to the plan (gas and groceries, plus any scheduled utilities, mortgage, insurance payments). I just checked and currenly have two pennies in my wallet and have no plans to pull any cash out of my account. Everything except mortgage, property taxes and electricity goes on the credit card for flight rewards. Every Friday the card is paid off for that weeks items. Any excess left in our account (over the $1K minimum we keep to avoid fees and act as a quick access emergency fund) goes either to our retirement savings or we make an extra mortgage payment. If we did have a frivolous purchase that week, we physically have to add a line to the spending plan and have that much less excess to transfer out on Friday. It’s very clear to see there the funds for that purchase came from and we know exactly where the money ought to have gone.
Every year we have one major frivolous expense – we take a big trip with our kids. When a trip is being planned we temporarily stop the weekly transfers of the excess and let it pile up for a few weeks. Our flights are always covered by our credit card points. Everything else is charged to the card (for points to be used next year) and immediately paid off with the cash accumulated.
Last week I went for coffee with coworkers for the first time in months. I paid for my $1.60 coffee with my credit card. One of them said, oh you should have told me you needed money. I explained that I don’t normally carry any cash and buy everything on my card. She gave me a blank stare so I added, “it’s how we all fly free to Europe every summer”. Later that day she stopped by my desk with a dozen questions about which card I had and how it all worked. If you know you can’t trust yourself with credit, cash is best, but for anyone else why wouldn’t you take the benefits offered by the card for doing precisely what you would do anyway?
We do weekly budget check-ins, and both have the mint app on our phones, so there shouldn’t be any excuses for going over. It’s only when we get lazy that it happens in frivolous categories (which for us is stuff like eating out and Starbucks).
@Mrs. Pop Starbucks gets us everytime…it truly is a guilty pleasure.
Wow. My husband and I are in a similare situation as you.
We started the year off really well and then slowly lost track. 🙁
But not this year.
We will be joining you in the NO friviolous spending!!!!
I think one way to help will be to give us each a certain amount of cash
each paycheck to do with what we please.
Once it is gone- it’s gone.
That way it is still budgeted and we don’t have to worry about going over
Which, unfortunately we have done a few times over the last couple of months.
Boo on that.
Thanks for being honest and keeping us accountable!
@Sara I find that being honest with myself is truly the hardest thing to do. I would love to sweep the cookies I ate last night under the rug, or the shoes I had to have that were on sale, but writing these things down keeps me a ccountable in both my fitness and financial goals.
You have both taken the first step, don’t give up even if you fall off the wagon–I assure you, you will be pleased with the results 🙂 Thanks for sharing!
I generally ask if the purchase will improve our lives and make us happier for the long term. That is enough to make us think twice about most frivolous purchases. Then if we really want it we plan for it.
@Lance That is an excellent wat to judge “frivolousness”!
My wife and I used to be like this. I was the one that handled all of the bills and the money, but then I realized that my wife had no idea what our financial position was. I started to include her and instruct her to start paying the bills. Slowly, it has worked, but we have a way to go in order to get her comfortable with our money situation.
@Grayson This is always a tricky thing for couples to do but is so important. Keep up the great work!
Since we decided to live frugally, we have eliminated our frivolous spending. Admittedly, most of our credit card debts is caused by these unplanned, unwanted, and frivolous spending. We unsubscribed our cable TV and landline phone as we both use our mobile phones most of the time to communicate with our family and friends. I also downgraded my cellphone plan because I rarely use it but I will be upgrading it again this year when I launch my new business.
@Manette Sounds like you are doing an awesome job cutting out that frivolous spending in your household 🙂
Congrats on the new business launch!!
My husband and I have eliminated frivolous spending by going to a cash system. We both take $100 a month to buy whatever we want. Nothing goes on the debit or credit cards. Since we’ve adapted this system, we’ve been able to save thousands a dollars.
Sorry but that made me laugh out loud (not good at the office!) Sentence one “eliminated frivolous spending” and sentence 2 “$100 a month to buy whatever we want”. Whaaaat? Sounds distinctly like $200/mth of frivolous spending 🙂
How about this approach. I assume you are already putting aside savings every month, but in addition put two $100 amounts in your monthly spending plan for extra savings – his and hers. Then as you spend your $100 add in the amounts and tag them with something like “lost savings opportunity – coffee” and reduce your planned $100 extra savings-hers line by the same amount. When you review every nonessential purchase as a lost opportunity you really give it serious consideration. When you get to the end of the month and find you have only $7 left to contribute to extra savings, rather than $100, you can look back through your items that start with “lost savings opportunity…” and decide if they were really worth it.
We used to budget for “misc pocket money” every week, and found that once we’d allocated that amount we felt like we were preapproved and didn’t need to pause and consider if it was really worth it. We also wanted to take a trip we felt we couldn’t afford. So the “Travel Savings” category was born. Everytime we opted to spend on something not part of the plan (coffee/magazine/movie etc) it was visibly deducted from the travel savings. After the first two weeks, we’d cut ourselves back to less than $5/wk each. We could clearly see that all that junk was putting a big hole in what we could be saving for the trip. We didn’t eliminate all the nonessentials, but we cut it way back by shining a light on exactly what made up the total and what we were giving up to have it.
LOVE the “lost savings opportunity” designation – it’s giving me ideas for our budget.
@JMK Love the idea! I will look to try after I get him through the 1st 3 months this way…baby steps, I don’t want him to give up right away 🙂 If I entice him with the idea of saving for a trip I may be able to help him see the light. Thanks for sharing!!
@Terah I hope we can get to the point where we save thousands too 🙂 By not depriving yourself of all frivilous spending I think it makes it easier to stay on track.
We have eliminated a lot of our frivolous spending, but it was not easy. Like you said, it’s not easy to cut anything cold turkey. We largely do a cash style budget and each of us gets a small allowance each month to do with as we please and then a joint one that we can use together on anything we want. Over the years, we’ve gotten to the point that we’re usually carrying money over each month as we’re much happier saving it for something we really want as opposed to just more “stuff”.
@John S That is a huge goal for us this year…stop getting more “stuff”! I spent a good 3 months last year selling our “stuff” on craigslist and ebay before we moved. The realization of how much “stuff” we had was a real eye opener. The judgement call is, “Do we need it to improve our life? Does it help us earn more?” If the answer is no, we don’t need it and yes it’s frivolous!
Timely post, Suzanne, and excellent info! We just went back and tracked our 2012 spending as we started our debt-slaying journey Jan 1st of this year. OUCH! In 2012 we piddled away thousands of dollars on “little things”.
This year we’re setting (and sticking) to a budget, and using a cash only system to help us eliminate frivolous spending. Thanks for the great info!
@Laurie I am glad you enjoyed the article 🙂 Our household had A LOT of frivolous spending in 2012 and not much saving so this is a major goal for us.
Best of luck on your debt-slaying journey…it sounds like you are starting off on the right foot!
Oh my, oh my…..can I identify with this post, Suzanne! Vonnie and I have a weekly budgeted amount for groceries, and we’ve been all puffy and proud that we stick to it. Then we started tracking and categorizing our spending and found that secondary trips to the grocery store on my home from work just to pick up “one or two things” actually resulted in blowing our grocery budget by 50%!
Tracking spending closely sure does open an eye to where your money REALLY goes, and can help put the smack down on unnecessary spending and put a budget back inline with reality.
AWESOME post, Suzanne – now if you’ll excuse me it’s noon, and I have to have my redbull. LOL.
@Travis Ah yes the “I’m just going to pick up a few quick things at the grocery store,” is a huge budget buster.This is one area I’m going to have trouble with, with my boyfriend. He loves to cook and feels that to make things he must use the best and of course most expensive ingredients. Baby steps…I plan to show him just how much that costs us and a few ways we can get around those expensive ingredients.
Thanks Travis, and you don’t need the redbull you already have wings 🙂
It’s amazing how all the “little things” can add up to one big number. I get an allowance so I have to do my best to stick to it or my wife will let me have it. We keep each other grounded when it comes to the budget. We communicate and discuss purchases just not allowance purchases. A budget is what helps us stay in control of our finances and I couldn’t imagine life without one.
It’s crazy how the small things are our biggest hurdle to overcome. Simple things like packing a lunch and only shopping sale items really do help a ton! My ex-husband had to have his daily Starbuck’s bottled Frap. I shopped clearance racks and bought discontinued flavors (he didn’t care) in bulk, and cut coupons and only bought on sale! If you have to have something, make it affordable!
Oh, man! I have been on my own for way too long to give up all the control of my money! I like how you handled this, and it sounds like you’re closer to the same page.
Great tips! Reducing frivolous spending or even eliminating it are great ways to repair your budget and credit worthiness. I think that sitting down together to perform budgetary and financial tasks, along with pie charts are great for realizing your goals. I signed up for Learnvest and I’m recategorizing many things into VERY detailed categories to determine how we can stop the madness!
I do receipts at least once a week and we’re trying the YNAB mobile app so we can see if budget is overspent in each category. Works well for us.
I just recently started using cash thoughout the week. Before I would swipe away, but carrying cash has been the only way for me to get the overspending sensation. The difference is my 2 week stipend is only for groceries and gas. Trust me it’s not much either. I have automatic transfers to my saving account because I am a recovering shopaholic (non-diagnosed). If I spend anything “for fun” have to make sure it’s within my monthly budget. I have been tracking my spending since 2001 only because I have a great program that I use and I absolutely love for its pie graphs, reports, and such. The only problem is I never made any adjustments to my spending when I over did it. A lightbulb went off in 2012 which allowed to take my spending habits more seriously. I’m glad I started before it was too late.
Love the “lost savings opportunity” line item. That is definitely in your face & telling it like it is! I also like the approach of paying off on Friday that week’s credit card charges. Think I will be implementing both approaches. Thanks for the tips – all are good ones.
I am attempting a no spend month in January because I waste money on junk. Take out, fast food or ready to go meals from the supermarket. Bad for the wallet. Bad for the waist line.
I was doing well but fell off the frugal wagon last night and bought take out chinese after a stressful shift at work. After the no spend month in January I am going to have to budget in some frivolous spending because I will do it and I don’t want to feel like a failure every time I do it. The trick will be to keep it to a certain money amount each week.
@Jane Savers You can do it! Don’t let one miss step get you down 🙂
Cutting down on frivolous spending takes a lot of hard work and discipline. When I was working for a multinational corporation, I regularly buy new clothes and/or shoes every month. But I turned my back on this habit since I started working at home. Whenever I see a cute top, a nice dress, a shirt with funny design, or a pair of shoes that will look sexy on me, I have to resist the urge by telling myself that I do not NEED it because I will not be able to wear it often. I have more clothes that I can still wear and I do not NEED to buy new clothes. Do I NEED it or I just want it? NEED is my keyword.
It’s only when you write it down on paper you realise how much these habits are costing. It’s great to see your husband is managing to cope without all the red bulls. I had a similar problem in buying two starbucks a day. I quit six months ago and with the money I saved reinvested in new equipment for my business, far more valuable than a caffeine kick!
We do it by setting up a variety of checking and savings accounts. We have about ten different accounts, emergency fund, non-monthly bills sinking fund, kids activities fund, vacation fund, groceries/daily necessities, monthly bills, gifts, “her” frivolous spending, his frivolous spending, etc. And we set up new accounts as we think of things to save for or other ways we want to separate spending money. It has worked great since we started about a year ago and it’s actually easy. With so many on-line banks, we just transfer from the various funds to the main checking accounts (our two main accounts are groceries/daily necessities and monthly bills) as we make purchases, either transferring ahead of time or replenishing the main account by transferring from the appropriate fund after the purchase. When the frivolous accounts are empty, wait until next paycheck!
Dan, I considered doing what you’re doing but was afraid it would become too time-consuming, which would just end up with me giving up. Any hints on how to make it run efficiently so I won’t throw in the towel? And do you pay cash for anything or is everything handled strictly by all these accounts?
I am asking all these questions because I think we need a new approach. Neither of us currently have jobs, so counting every single penny is new to us. Previously, our budget was made up of major categories, charging what we could to a card that would be paid in full every month & give us cash back at the end of the year, and the only cash we had was $50/week each to spend as we wished. I switched to cash for gas & food, which cut those by 50% (yes, I was truly amazed). However, I get thrown off track by surprise or unanticipated expenses.
I did try plain old cash envelopes for each budget-buster, but then I had a tendency to borrow from them for something else entirely. Whatever hints you or anyone else can give me would be greatly appreciated. Thanks!