Do you have your personal spending under control? If so, how do you measure whether you successfully keep your urges to consume at bay?
Having financial control is tricky because we all work hard. We feel we deserve certain luxuries when we put so much into work.
Some of us may love to spend on coffee; for others, it’s video games. However, if we want a chance to earn financial freedom, we must consume in moderation.
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What’s your money dial? In his book “I Will Teach You to be Rich,” Ramit Sethi says we each have a money dial.
Your money dial is an area where you love to spend money. He encourages you to explore your money dial fully.
However, he says to turn down the money dial in other areas where you don’t get as much satisfaction.
For example, if your money dial is going on vacation, you can turn down the money dial on cars. Therefore, you trade in your $80,000 vehicle for a $20,000 one, giving you the extra resources to vacation more.
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I use a daily budget. “I Will Teach You to Be Rich” was the first book on my journey to becoming financially free. I read it back in September 2020.
I am now financially free, so that I can reflect on the journey. Daily budgeting is the best way to focus on my money dial.
I know budget is a bad word. But, if you genuinely want to be successful with your finances, there is no other way except to budget religiously.
For my daily budget, I focus solely on my spending habits, not the family or household. I have separate budgets for bills, maintenance, saving & investing, and food.
My daily budget includes gas, clothes, dining out, coffee, and entertainment. How did you spend your money before you had responsibilities? The daily budget keeps that mantra.
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Arranging your daily budget. The best part of your daily budget is that you can focus on the things you love.
If you want daily coffee, your daily budget can allow for that. Your budget can support you if you want to buy a video game or go to the movies once a week.
The first step is determining your daily budget. I currently live in San Diego, so my daily budget is $50 per day—for a total of $1550 per month.
I arrived at this number by first taking care of my bills and investing budgets. Then, I save some for my emergency fund every month.
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I then carve out my daily budget of $1,550. If there is any remaining cash flow, I put it toward more investments.
How to track your spending. Most people loathe the idea of tracking their spending. They feel it will take the joy out of life.
At first, it may feel like you are over-analyzing your spending, which reduces the joy of buying things. However, after a month, you will feel empowered because you will spend without guilt.
I set my budget up with five columns (Day / Amount / Running Total / Ghost / Notes). The key to the budget is the Ghost tab.
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The Ghost tab represents if you spent the full amount every single day. So it goes from $50 to $1,550 for me across 31 days. ($50, $100, $150, etc.)
The Ghost tab is a negative number, so you can easily add it to your Running tab to see where you stand.
On the 4th day of the month, my Ghost tab is -$200, and my Running tab is $147. That means I have an extra $53 to spend. When I combine the two columns, I receive a -$53, which means I am $53 below budget.
If on the 4th day (Ghost -$200), my Running tab was $275, then I have a +$75 total. That means I am $75 over my budget.
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Now things get fun. If you are over budget on the 4th day, it’s not a problem. You simply can curb your spending to place yourself back on budget.
You could order a movie online instead of going out on Friday night. Or, you cook at home one day instead of eating out.
The power of the daily budget is always knowing exactly where you are spending-wise. You never have to guess about your current level of purchases.
Keeping your receipts. The best way to remember to document your spending is by keeping your receipts.
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I automatically deposit $1,550 into my Discover Cashback Debit card every month. I know to keep my receipt anytime I use this card.
When I get home, I place the receipts somewhere I know I will see them. Usually, I insert them into my Macbook Air laptop.
I always use this laptop, so I see the receipts as I open the lid. I then go to my Google Sheets tracking page and document my spending.
It truly isn’t that bad, and it is fun to find that you have $200 in unspent resources. At that point, you can treat yourself to something special without feeling guilty.
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Adding extra income. The best part of my daily budget is that I can add more income anytime via passive income.
I receive roughly $250 monthly in dividends from my Cash App account. I can use this money and my daily budget to give me even more freedom.
I can add passive income from my rental properties and book royalties as extra cash flow. But it all starts with my daily budget.
Without my daily budget, I wouldn’t know how I love to spend my money. I am not a massive daily coffee drinker, but I love buying fresh salads (I hate chopping).
So I may spend $10 to $20 on salad and snacks daily. Gas in San Diego is expensive, so I watch my extraneous driving.
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If I want to drive a lot, I can only spend a little once I arrive. So, navigating to different parks, beaches, or National areas is best.
Conclusion. Keeping a daily budget is overkill for most people; however, they most likely will not get ahead financially.
I have never felt I had this much money in my life, but the daily budget keeps me focusing on what is essential.
It also keeps me from inflating my lifestyle without knowing. The only way to spend more is to raise my $1,550 allotment.
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The best way to beat inflation is to skip a day of activities or spending per month. You can find something free to do, like hiking or jogging.
I’ve kept my daily budget in San Diego for over eight months and have only gone over budget once. You can control your money habits by using a little tracking system.
How badly do you want to take control of your finances? It feels good to go to a baseball game and not worry about putting it on a credit card. Use a daily budget if you want to live a guilt-free exciting lifestyle.
P.S. I will leave a copy of my daily budget spreadsheet in the downloads section of this page. Good Luck!
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