How to Incorporate Separate Line Items for Spending

Sarah Brumley

Sarah Brumley

It’s important to incorporate spending into your budget as soon as possible. If you aren’t sure how to do that, today’s episode is for you! I’m walking you through how to create separate spending line items for each individual in your family AND how to keep track of it all along the way. Sound like something you need? Well then, let’s get started.

Links for This Episode

Podcast Episode Recommendations

Grab Your Financial Fix Up Planner Today with 20% OFF

Here’s the deal: in order to achieve your long-term financial goals, you have to have a budget that works for you and your family. That means, getting super clear on your income, expenses, and total debt payoff amounts, so you can make any necessary changes and begin to see progress. That’s exactly what the Financial Fix Up Planner is designed to help you do. With step-by-step instructions to set up your budget, monthly challenges to keep you on your toes, menu planning resources, and space to reflect on your goals, you’ll have everything you need to pursue your dream of financial freedom. Sound like something you need? You can grab your copy today at lemonblessings.com/planner and because you are a podcast listener, you can get it for 20% off by using code SUMMER24. Once again that’s lemonblessings.com/planner and use code SUMMER24 for 20% off your copy of the Financial Fix Up Planner.

How to Incorporate Separate Line Items for Spending

Well hey there and welcome back to another episode of the Financial Fix Up Podcast. I’m your host, Sarah Brumley, and a close friend of ours got married this past weekend and it got me thinking about budgeting and marriage and the things that we encountered early on that didn’t go well for us financially. And one of those things was spending money. Because when we started out, we really didn’t have any extra money at all. So, there was no spending money, right? But as the years went on and we made progress in our financial situation, there was extra money for spending but we didn’t know how to manage that as a married couple. Add kids to the mix and it can be even more complicated, so today I wanted to spend a little time talking about how to incorporate separate line items for spending into your new or existing budget so that you can continue to achieve your financial goals AND have a little fun along the way.

Why is a Spending Line Item Important?

So, put simply a spending line item is just another category of your budget. It’s an amount designated for a specific purpose – in this case spending. This could be money that is spent in a way that’s completely up to the individual person OR it could be a line item meant to handle specific expenses related to that individual.

We’ve used these line items in both ways and more often than not, it’s a mix. So, things like personal products, clothing, shoes and things like that all come out of the individual spending line item. But, also, it’s money that can be spent on discretionary purchases, like a hair cut, coffee out, random purchases, and so forth. The key is that when that line item has been exhausted for the month, then there is no more money for that individual. So there does need to be a little planning in place to make it all work. But that’s also what makes this so important. By planning ahead and assigning a line item to each person in your home, it’s less likely that one persons wants or needs will prevent another persons wants or needs from being met.

Hopefully that makes sense.

So, how do you go about implementing a spending line item for each person that actually works? Well, there’s really three steps.

Step 1: Know Your Individual Expenses

First, you have to know your individual expenses. The key to this is listing out each person that you need a line item for and then determining what their weekly or monthly expenses are.

In our home, we incorporate things like personal products, incidental clothing purchases, makeup, books, and all of those types of things into this category. So, obviously if it’s an item our entire household uses – like toilet paper – then that goes into our household category, but these things are for the individual.

Of course, there’s no right or wrong answer and it’ll probably change over time, so don’t overthink it. Just make your best educated guess and move forward.

Step 2: Assign an Amount Per Line Item

The next step is to assign a budgeted amount for each line item. To do this, you have to have a budget already in place and know your numbers. Okay? There’s no way to just randomly assign money to a category without knowing how much money you have above and beyond those critical expenses. So if you aren’t sure or don’t have that budget in place just yet, I want to recommend that you grab the Financial Fix Up Planner to help you do just that. You can find it at lemonblessings.com/planner and you’ll have everything you need to get this up and running.

But if you do have your budget already in play, then it’s time to look at what you have leftover after paying your bills that you can allocate to spending. And keep in mind that it might be that some of the money that you’ve been using for these items may have come out of a different category, so you may need to move some funds around.

Once you know the total amount that you have for spending money for your family, it’s time to decide how much money each individual person will receive. You could decide to divide the total amount equally or you might want assign more money to one person than another just because of the difference in need. You might also choose to look at how much you want an individual to have weekly and then just multiply that by four.

In our case, Justin and I have more money in our line items just due to the fact that as adults, we tend to have more expensive expenses. For the kids, we decided early on to allocate a weekly amount that initially – for my older girls – amounted to their allowance that they received for chores. That amount has stayed pretty consistent over the years and is what we use now for our toddler as well. Our teenager is now working which means that her line item is more for incidentals now rather than spending as she has her own spending money that she’s worked hard for.

Once again, there’s no right or wrong answer here. You’ll learn what works and be able to make changes along the way. I promise you, okay. It’s not set in stone.

Step 3: Choose a Tracking Method

Now that you know how much money each person is going to receive for their spending line item each month, and that it fits within your budget, it’s time to decide how you will track what’s been spent.

We’ve done this in a couple of different ways.

First, and definitely not my favorite method, is that the person who controls the budget deducts each purchase made from the individual line item. You can do this with a banking app or even with a spreadsheet, but it is time-intensive and can lead to excessive spending if it’s not tracked consistently. Personally we do not use this method any more because we’ve found easier ways to go about this.

The second method we’ve used is that each person in our home has a separate checking account. So, many times the money will go into those separate accounts and then is tracked by the individual. This is how Justin manages his spending money and the girls have used their accounts off and on over the years. My only suggestion here is that if you have kiddo accounts, make sure that they can’t overdraft them because then you are stuck with additional fees. So, that’s definitely a consideration and one of the reasons we don’t always use this method.

The final method and the one I personally prefer is cash. Each time we get paid and our budget resets, I head to the bank and get the spending money. Then, as it’s time for the kids to have their spending money or make a purchase, I have the cash on hand to make it happen. It’s very easy to see what’s been spent and what’s left. And, personally, I have absolutely no problem standing in the store checkout line and paying for several separate purchases. Sure, it’s uncomfortable knowing there are people waiting in line behind me, but if it keeps the budget in tact, then why wouldn’t I do it?

So, ideally you’ll pick a tracking method that works for you and your family dynamic so that you don’t exceed the amounts you assigned to those line items.

Incorporate Your Separate Line Items for Spending

And there you have it – the exact method we’ve used to incorporate separate line items for spending.

Budgeting and achieving your financial goals shouldn’t feel complicated or overwhelming and I believe that one of the simplest ways to take that overwhelm out of the picture is to separate the spending money. By doing so you give each person a little say in what they do with their money each month AND you don’t have to worry about one person spending it all and another getting nothing.

So, I hope that this was helpful for you. And once again, if you need help getting your budget up and going or just aren’t sure your current budget is working for you in the most effective way, grab a copy of the Financial Fix Up Planner. It’ll walk you through everything we’ve talked about today so that you can get on the road to your version of financial freedom.

Whatever you decide, just know that I’m cheering you on! You’ve got this! Have an amazing day and I’ll chat with you again next time!

More
articles