Yesterday was a great day. My mom is in town, and all five of us (wife, mom, and two boys) went to Ruby Tuesdays. We ate whatever we wanted and walked out the door, spending $150.
That’s not bad for a family of five, especially during an inflationary and recessionary timeframe. But the best part is that I actually had a budget of $312.
That’s right, by keeping a tight budget, I cleared enough room to spend much more than I needed that day—that’s the magic of having budgeted fun.
Budgeting done wrong. Most budgets separate all your expenses (wants, needs, savings) into multiple categories.
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As a rule, it’s good to have pre-set allocations like 50% needs, 30% wants, and 20% savings. The book “All Your Worth” goes more in-depth in this budgeting style.
However, combining some of these into a daily budget is better. I wrote about my $50/day budget in “Living in San Diego on $3,000/month.”
The daily budget allows you to balance various parts of your life against one another. Therefore, it makes you think about the overall picture, not just one line item. Let’s give an example.
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Daily budget in action. Let’s say you have a monthly budget of $600 for food and $200 for gas. That equals roughly $20/day for food and three tanks of gas (at least for me).
I may eat out more or drive more because they are separate line items. I am looking at each item only against itself.
Let’s combine the two, which gives us $800/month or $26/day. I can now balance my budget against my total life picture.
I’m Too Serious
I can eat leftovers or drive less to save some money. I am always thinking of ways to save money to leave more money for special events.
It’s amazing how creative your mind becomes when you put it in a restrictive environment. I have been living on my $50/day for over three months, which is life-changing.
How I paid for Ruby Tuesdays. As you can see, on the 19th, I was $262 under budget. Therefore, I knew I would be well within the costs of Ruby Tuesdays.
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We all ate cheeseburgers, ribs, and ice cream. I had a couple of Margaritas—it was a wonderful time with the family.
After Ruby Tuesdays, I am still $160 under budget. That’s the power of budgeting with intention. It doesn’t sound fun, but it will allow you to have much better experiences because you won’t stress about them.
Let your mind think of alternatives. What if I only had my $50 for that day available for family fun? We could have enacted many options if we only had $50.
We could have cooked at home, had a BBQ, or used coupons to get some fast food. We could have bought fried chicken at the local grocery store or ordered pizza.
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I had a full tank of gas, so how about going on a nice drive and having a picnic inside the warm car (it’s freezing in Florida)?
When you live and die by a budget, you are in control. Your brain actually loves making restrictive choices because that’s when it performs best.
Credit cards for the loss. That’s why credit cards are so dangerous; they give you the easy answer. Using a credit card, I could afford to spend $500 for dinner.
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Who wouldn’t love to impress their mom, wife, and kids with an expensive dinner? Why not order a massive steak and drink top-shelf alcohol? The credit card is paying for dinner, right?
When we use credit cards, we become far less creative and allow money to do the thinking. It’s a dangerous road to travel, and it’s hard to recover from the credit card mindset.
If you are still using credit cards to pay for your fun, consider the switch to a daily budget. It will be challenging at first, but things improve quickly.
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End of the month fun. This is not to mention when you have extra budget money at the end of the month. Over the last two months, I have had $304 and $294 remaining.
I keep that money at the bottom of my account, just in case I want to do something special. There is nothing like having fun during the month and still having money remaining.
This budget does not include dividends or any other passive income you may earn. I still have my dividend debit card growing on the side for even more fun.
What is Your Rich Life 2?
Budgeting vs. spontaneous fun. I know most people love the word “spontaneous.” It does sound good to go somewhere randomly and spend a random amount of money.
It is incredible to be spontaneous occasionally, say once every couple of months. But it’s not a good idea to always do what we want without regard for our higher purpose.
As family people, we owe it to our children to think about their future. Indiscriminate spending sets a lousy example, depletes our savings, and increases credit card spending—it’s terrible all around.
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I promise once you take your budget seriously, you’ll have more money than you can imagine. Let your mind do some heavy lifting instead of your wallet.
Conclusion. If you can type in an Excel spreadsheet (I use Google Sheets), you can budget. Yes, it’s hard to reconcile with yourself every day, but it works!
I have never felt as rich as I do right now. That includes earning $1,100/month in dividends and making $170,000/year at my day job.
My Favorite Index Fund
My true power comes from my daily budget and being in complete control of my spending. This budget allows me to have more fun than I thought was possible.
Creativity is an exceptional human capability. When you give your brain $100 to create a family event, it will over-achieve each time.
When you have an “unlimited budget” due to using a credit card, it will never be as satisfying as sticking to a budget. Do you have what it takes to maximize the usage of a daily budget? Good Luck!
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