Since January has been deemed, Financial Focus Month, I knew I had to figure out ways to better manage my spending.
When it comes to managing my cash flow, I am adopting three changes:
1. Re-configure how my invoices and spending cash are distributed. In the past, I’ve had an odd approach to when I’d invoice clients and when I got to use that money. Let’s say I invoice on Dec. 1 for my November work. I’d have to wait until that money was paid to me, even though I depended on it for that SAME month. As a result, I’d neither plan my spending and I’d often lose track of how I spent the money I hadn’t yet received.
I’ve changed that approach by pushing my spending money behind by one month. So if I invoice on Dec. 1 for November work, I watch that money roll in throughout December and that money then becomes January’s spending money. I now have a clear understanding of how much money I can expect to earn and spend a month ahead of time. To make this a reality, I’ve taken $300 from my savings to get a jump on the approach.
I thus now know the spending money I’ll have for February. Already, it’s made me both sickened with fear and empowered. I love feeling more organized, but I’m also freaking about how February will be a low-earning month and how I’ll manage that limited spending money.
2. Drawer month. As in, you put a prescribed amount of money in your drawer (furniture, not scunders) and when the money is gone, the money is gone.
It’s a concept my sister introduced to me, yes, seven years ago, and it’s also the approach Gail Vaz-Oxlade makes her clients follow in ‘Til Debt Do Us Part. I’ve watched the show for years (I love the tears!), but never adopted her financial approach.
She is some crazy. Crazy good.
I took out $300 for January’s spending money to see how I do with it and where it gets me.
Holy dollah bills, those dollah bills disappear quickly. It has forced me to plan how I’ll spend the money and ensure I have enough money later in the month for planned events/presents. This brings me to my third financial change.
3. Track my Spending
Using a simple notepad and pen, I’m making a daily log of money spent.
Five days in, I’ve only had a one “No Spend” Day. Boo.
Here’s what I have already spent this month:
- Birthday presents: $60 (I got some sweet deals. More on that below)
- Drug store/lady purchase: $6.38
- Les Miserables Tickets: $50 (we’re attending a performance next month and tickets are $25 each. Because I know February is already a low-income month, I decided to use my January money to pay for it).
- Coffee/Tea Biscuit: $7 (I went to a coffee shop yesterday for two hours to get work done. I bought a fancy drink and I was hungry. When she ringed in $7, I was SO mad at myself for the ‘irresponsible’ purchase).
- Tim’s Coffee/Tea: $3.19
Money already spent: $126.57
Tracked spending has forced me to look ahead later this month and plan for any upcoming expenditures.
I looked at the calendar and saw I’d be purchasing three birthday presents. Rather than leave it to the last minute and overspend as a result, I completed online shopping January 1, saved money on shipping and got some deals. Not only did I save money, I am better organized! Win.
I’ve nixed the idea to sign up for a boot camp three-month session, because I can see how it will eat up so much of that drawer money, and that bums me out. But it’s been a good lesson that just because I want to do or buy something, it doesn’t mean it’s feasible.
I have budgeted for a dinner out and the eye make-up remover and conditioner (another $75).
Five days in, I’ve committed to spending $200 of my $300. I don’t have any other big expenditures coming up, but with that, I can see how quickly this money disappears and that frivolous coffee purchases can slowly eat up that money.
I am constantly thinking about my money, but in a healthy, “how will I spend it?” kind of way, rather than a “I have no idea what’s in my bank account, but I’m pretty sure I can afford this bottle of wine” approach.
It’s good. But just hard. And I’m really nervous about what happens when/if I do run out of money the end of the month.
Articles of Interest:
My favourite financial blogger: Give my Back my Five Bucks
David Bach’s The Latte Factor
Gail Vaz-Oxlade’s latest project, My Money, My Choices (it looks interesting, but intense! I don’t I want to spend my book club meetings discussing budget sheets – although we did talk financial tips recently!)