Discretionary spending is money that you spend on your lifestyle that excludes necessary spending such as gas and electric bills and petrol for your car. This means discretionary money can be anything from the money you spend on eating out to shopping for clothes for going out. If you are looking for the top tips on how to budget for discretionary spending, you have come to the right place.
Make a list of your priorities
Everyone is different when it comes to spending money on personal items. Big Hospitality cited research that found that £52bn was spent on eating out and restaurants in the UK. If you are someone who loves going out to eat with your friends, you already know that eating out can be very expensive. If you are trying to save money, make cut backs in other areas of your discretionary spending. If you are ready to make eating out an important part of your budget, you should look for vouchers and offers so that the cost of eating out doesn’t become too expensive.
You could also try new things with eating out: Instead of going to make restaurants per month, you could cut back and go to a few high quality restaurants that you are excited about. This way you still get to indulge in restaurants without spending more money.
If you love shopping for your favourite items, you also need to make a list of priority items that you want to buy. It is not possible to buy everything you want at once, unless you have planned ahead of time to do this.
Create a spreadsheet that you update regularly
You should create a spreadsheet that has all of the information about your discretionary spending. Try an experiment – update it every day or every week and you will instantly see where all of your money goes. Your spreadsheet for discretionary spending should have categories such as how much you spend.
If you want to spend money on eating out or shopping regularly, give yourself designated specific days where you go shopping or eating out. This will help you avoid overspending and it will help you spend your money on the things that you want.
Keep overspending in check
Overspending tends to happen if you use plastic more often than cash, particularly if you are a spender. Overspending can hurt your discretionary spending – you need to pace yourself and space out your purchases as well. You should not feel like you need to have everything at once. The rise of fast fashion in the UK has made spending an almost weekly occurrence, for example. Fast fashion brands have found a way to create consumer needs and wants every week by having new arrivals every week. This can definitely make you overspend so you need to keep this under control.
Make tough choices
Gym membership in the UK has gone up by 44%, according to statistics cited in The Guardian. If you are someone who wants to get into better shape and you think you need the gym, gym memberships can be expensive and they require monthly financial commitments. Personal trainers are another expense that someone people feel that they need to pay for however, you should decide whether paying for fitness is something that you want to do. You could also save more money by working out yourself in the fresh air. You need to decide if it is something that you are truly passionate about and then you can spend the money on it accordingly. For some people, fitness has saved their life, for others, they would prefer to spend money on other discretionary items.
Make a timeline for luxury
Luxury spending has seen a rise in recent years as the world becomes smaller and more globalised. The growth from emerging economies has grown luxury brands in the UK and in Europe. If you are someone who loves luxury products, you should create a dedicated plan on how to purchase these products. Whether you love watches, jewellery or handbags, you should create at least a three month plan where you save money every month to buy these luxury products.
If you want to dedicate more of your money to discretionary spending, you need to save more money in your personal savings account. It is important not to just spend money for the sake of spending money. You also need to have a plan for saving your money especially for a rainy day. The state of the economy and current affairs makes it even more important to have a safety net to protect you just in case times are tough for you.
Top tips for taking control of your discretionary spending
- Don’t deprive yourself: If you love reading magazines, you can still buy subscriptions just limit the amount of subscriptions that you buy in order to keep your budget in line.
- Do things on a schedule: If you are a film addict, going to the cinema is something that is natural for you as drinking water. You don’t need to go all the time – create a schedule every month to see the latest releases that you are interested in.
- Make a wishlist that motivates you: If you work hard, you should have a list of products that you can indulge in and you can treat yourself to. Make a wishlist and know the exact prices of products that you want to purchase, and create a plan on how you are going to buy them.
Discretionary spending is an important part of everyone’s personal finances. It’s not possible to just save money all of the time, and not spend any on yourself. It is healthy to spend money on things you love as long as you have created a solid budget that can support your discretionary spending. With this guide, you can take total control of your disposable income spending in order to create the life that you are interested in.