How to Manage and Track Your Discretionary Expenses

After you have followed the first 3 steps of my spending system, what you are left with in your personal checking account is the money available to cover your discretionary expenses.

How Much Money Is Leftover For Discretionary Expenses?

The amount remaining in your personal checking account will basically tell you if you are living within your means or not. If the amount is too small to live on, then you need to go back and reassess you recurring expenses and reduce them as much as possible. It may also mean that you will need to take in a roommate or perhaps get some part-time work to bring in some extra income.

Think of Your Checking Account As A Fixed Data Plan

Provided the amount left over is reasonable, you must make sure that you stretch this amount to the next paycheck. If you run out of money in your checking account, you cannot dip into your recurring expenses account! I like to think of your checking account as your financial fixed data plan. You can use all the money in the checking account until your next paycheck, however, you cannot buy any additional money. However, if you do not spend all the money by your next paycheck, the money will rollover to the following pay period.

The Best Ways To Pay For Your Discretionary Expenses

Now the question is how do you access and track the money left in your checking account? To do this, I recommend the following methods of payments in order of preference.

• Debit card tied to the checking account
• Reload of apps, such as Starbucks, Dunkin, and others
• Venmo, Paypal, and Zelle
• Writing checks
• Cash withdrawals (The less cash you use, the easier it will be to go back and track your spending by category and payment method.)

Avoid Credit Cards For Discretionary Items

I don’t recommend that use your credit card charges for discretionary items. As I have found credit card usage for discretionary items is the primary reason people to get into credit card debt.

• When to pay with a credit card or debit card

Make Adjustments As Needed Going Forward

Make sure you adjust the amounts between your recurring and discretionary expenses as you move forward. Maybe there was an item you thought was infrequent but it turns out is more frequent than you thought. The more items you make recurring the easier it is to manage your monthly spending.