If you’re the type of person who thinks “discretionary spending” means “I can buy what I want, when I want,” read this person’s idea for how to create an Impulse Buy Savings Plan. It gives you a methodology where you can effectively trap your impulse purchases in a cooling-off period, while also seeing how that money would look if it were saved instead.
The idea is simple enough, but has the potential to drastically change how you look at the money you spend while still giving you room to make discretionary purchases if you really want to:
Anytime I am gripped by a strong and legitimate desire to buy non-essential crap of any sort, I will transfer the full cost of the item including tax and shipping from my primary checking account into my Emigrant Direct personal savings account with a memo in Microsoft Money to remind me what item the money is for and let it sit there for one month. If I STILL want the crap a month later, I can, if I desire, transfer the money to my Electric Orange checking account to buy it. However, if the burning need for the piece of crap in question has subsided, I simply leave the transferred funds in my savings account to accrue more interest.
The author also sets herself a very strict “allowable” spending limit each month—that is, funds for purchases that aren’t passed through the Impulse Buy Savings Plan litmus test—by using a debit card that isn’t connected to her primary checking or savings accounts. It can be a sort of enforced allowance if you need that extra level of structure to curb your spending.