Lately I've started dividing my expenses into two categories: Necessary and Optional. Next to each item in my check register, I write one or the other. At the end of the month, I just add up the "optionals" to get an idea of how much money I'm spending.
This is a pretty basic approach to budgeting, and it's far from an original idea - but I do find that it makes a fun challenge. Can I spend less this month than I did last month?
Now of course, the tricky part is deciding what really is necessary or optional. A wedding present for my coworker went under necessary, yet a trip to the pharmacy went under optional. There's no real science to this - and I think everything really falls somewhere inbetween the two. Shades of gray.
At any rate, my optional spending for August at this point is exactly $59.66 and it includes junk food, movie tickets, a trip to the local bar and a haircut. Not bad - last month's optional expenses total was well over $200.
So how do you feel about this? What do you consider a necessary expense?
Necessary vs. Optional: You Decide
August 22nd, 2006 at 03:58 pm
August 22nd, 2006 at 05:32 pm 1156267943
August 22nd, 2006 at 09:00 pm 1156280426
August 22nd, 2006 at 11:41 pm 1156290082
All the rest - optional, to various degrees. So your co-workers wedding gift - it was needed for social reasons, but since you would still be alive if you didn't get one, I'd define it as optional. Not it wasn't unimportant, but optional.
You could then define optional as important optional, and discretionary. That way you get the three stages of budgeting: must have (lost a job), kinda need (need a better job), sweet to have (made it!).