Plan for discretionary spending
Webster’s dictionary defines discretionary as: “left to individual choice or judgment : exercised at one's own discretion”. This is money you budget based on your own judgement. SHF Master Spending and Debt provides a way to control the actual spending associated with it.
According to debt.org Millennial’s spend about 40% of their monthly income on discretionary costs – clothes, entertainment and other non-essential items.
Each page in the system has a Show Help section. The following is an excerpt from the Weekly Budget help file:
Carefully determine the Planned amount you want to use , here are some guidelines for typical weekly categories, for:
- Groceries a single person spends around $60 a week, a typical family of four around $200 a week
- Dining out a single person likewise spends around $60 a week, a typical family of four around $58 a week
- Car gas per car a typical cost is $20 a week (this varies greatly based on gas prices, how efficient the car is and miles driven per week)
- Entertainment a single person spends around $56 a week, a typical family of four around $46 a week
- Spending money is for incidental expenses like coffee or buying a newspaper, general things you buy through the week, there are no standards but you should plan for this spending.
Discretionary spending is spent by cash, debit cards and credit cards. Accounting for these expenses is a difficult task, which is why many spending plans fail. Money ends up getting spent on any number of things instead of being allocated for regular bills, and credit card debt continues to grow month by month.
Paying for discretionary spending
It used to be people used cash to control discretionary spending each week, now cash is no longer king and there are a large variety of available payment cards; debit, credit and prepaid. Forbes delves into this issue in this article Minding Your Budget: A Weekly Allowance For Adults?, today you can gain control of your spending when you use a prepaid card for discretionary spending, loading the card each week. Forbes picks the very best prepaid card available today best prepaid card and this has no monthly ($6.95) fee in Texas, New York and Vermont!
Note: Prepaid cards act a lot like a debit card however they should not be used to pay for gas because, the gas station will automatically authorize an amount and this authorized amount is not replaced with the actual cost for sometimes up to 7 days and the authorized amount is typically quite a bit more than the cost you pay at the pump.
Accounting for discretionary spending
With SHF Master Spending and Debt, you can import bank and credit card statements and you can map multiple expenses to the applicable category in the Weekly Spending Plan section.
The imported data can be categorized into categories for your plan, so you can see exactly how much you spent in each area. The image below is an example from the “Jeff Spending” category:
Controlling discretionary spending
The system tracks spending against both the equivalent Monthly amount and your Weekly Planned amount. This way you can see whether you are over- or under-spending compared to what you planned. In the “Available Now” column below, the system adds the weekly planned amount, each week and subtracts the Actual cost from it, this tells you where you are overspending and where you currently have money available each week.
This is where you plan and manage your weekly spending.