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Making Sure I Spend That Money!

April 8th, 2014 at 01:46 pm

I have set up my personal finances with a baseline budget* to cover my core needs and a Discretionary Fund** that acts as a money pot that collects all my income above what is needed to cover that baseline budget. Theoretically, any and all monies in that Discretionary Fund are available for fun spending. But my Discretionary Fund keeps growing because I have had a problem (a block?) with spending it. Here is the story and what I am doing about it.

Separate from my Discretionary Fund, I have TWO cash reserves***. One is equal to one year's baseline budget and the other is equal to my health insurance's out-of-pocket maximum (just in case). So my Discretionary Fund really is free and clear. But I obviously have not bought into that. So I have made a deal with myself to make it "okay" for me to spend substantial amounts on fun.

I find that I can emotionally accept earmarking half my Discretionary Fund for fun spending and holding the other half back in a sort of financial limbo. So this is what I am doing based on that realization. At the end of every month, I am taking the balance in my Discretionary Fund and dividing it by half to establish my "emotionally okay to spend" limit. Then I am dividing that figure by 3 to calculate how much I am giving myself permission to spend on fun each month for the next 3 months. And then I am committing to that spending right away by filling in my free time slots**** for those upcoming 3 months with specific planned and budgeted outings, trips and activities.

Is this working? Yes, as long as I follow the planning process. But if I fail to plan my fun out, the time fritters away and the money does not get spent. So this is a work in progress for me. And what I will do to make myself accountable for spending on having fun (which, I know, is weird) is going to be to put up a My Plan For Fun page on my blog and update it on a weekly basis to track what I have planned for fun and what fun I have actually had.

# # #

*My $18K Annual Baseline Budget:
http://retired-to-win.savingadvice.com/2013/12/29/my-18k-ann...

**A Discretionary Fund, Not a Discretionary Budget:
http://retired-to-win.savingadvice.com/2014/03/29/a-discreti...

***Making Over My Reserves Plan:
http://retired-to-win.savingadvice.com/2014/01/04/making-ove...

****Making Time For Fun:
http://retired-to-win.savingadvice.com/2014/04/08/making-tim...

2 Responses to “Making Sure I Spend That Money!”

  1. TashaC. Says:

    I understand how hard it can be to let go after holding tight for so long. And the fear that you will go out of control. Because it is much easier to spend money than make money. I hope you are able to make the money into memories though!

  2. Retired To Win Says:

    Thank you, Tasha!

    Fear of going out of control, huh? I don't feel it, but I'll look deeper and I will add another comment -- or edit this one -- when I have given it a good thinking.

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