Way back in December, Tech Support and I were talking about discretionary funds – the money we spend on:
- Starbucks, more books for the teetering TBR pile, jewelry that does not go with my writer’s uniform of nerdy T shirts and yoga pants.
- Starbucks, vehicle upgrades, and random pieces of electronica (in Tech Support’s case).
We realized that we had no idea where this money was really going or how much we were spending on stuff that could not, even in the most liberal sense of the word, be considered necessities. We agreed that we had to give ourselves permission to use our money in fun ways (it’s a drag being practical ALL the time), but we needed limits and a trackable system.
And The Five Dollar Jar was born.
Adapting an idea from Gail Vaz-Oxlade, we found two mason jars and labeled them with our names. On the first of every month, $50 in five dollar bills gets added to each jar. We’re allowed to spend our bucks on anything we want, guilt-free, as long as:
- There is enough cash in the jar to cover the expense (no borrowing against future months).
- The cash gets taken out of the jar immediately (so we can see how much has been spent and how much remains).
We’re seven months in now, and it’s amazing how well the system is working. Some of the things I’ve noticed:
- The jar makes the money real. We use our credit cards for everything (they get fully paid off at the end of the month), but credit card money feels theoretical, somehow. You don’t see the bill for a month, so you don’t realize how much money you’re actually spending. I’ve discovered that when I can see the physical bills, I’m much less likely to spend them.
- Because there’s a strictly enforced limit, I’ve become much more strategic in my spending. There’s planning involved. Do I really want to spend $5 on a latte when I could save up for a couple months and buy myself a ukelele? Do I really need to buy another new book when I’ve got more than 100 unread books already in my house (that one’s harder – books are my addiction)? 🙂
In other words, The Five Dollar Jar has been a resounding success. We’re spending less money on “frivolous” purchases, and by focusing on things we really want, we’re getting a lot more bang for our buck.
Are you a fan of Gail Vaz-Oxlade? Do you have trouble tracking your expenditures? What systems have you tried to manage your budget, and how did they work for you? Share your tips and experiences in the comments.