Our “no spend summer” starts this weekend

by Karen on May 28, 2009

Last week, I wrote about the steps we’re taking to make sure we can get through the summer on my income alone. Throughout the year, Tony is paid to teach undergraduate classes at his university. Now that it’s summer, he won’t be receiving a paycheck. We knew this was coming all year, so we saved enough to cover his income through the summer without using our emergency fund. But now we want to try to hang on to that money, too.

We’ve come up with a new plan to ensure that we don’t overspend and we’re able to save. It’s something we’ve never tried before, but we’re excited about the challenge. Beginning this weekend and continuing through the months of June, July, and August, we’ll not only be limiting our spending, but we’ll be living on a cash budget.

Here’s how it works:

I added up our total income for the summer without Tony’s paychecks. Then I divided that number by three months to determine our total monthly income. I added up all of our fixed expenses — rent, utilities, and other bills — and subtracted that total from our monthly income. After paying all of our fixed expenses, we’ll have $370 left each month. That means we can only spend $90 a week on groceries, entertainment, and other expenses. This is only a little less than what we would spend anyway, but lately we’ve been more and more complacent. I really want to make sure we’re not tempted to go over.

Each week before we head to the grocery store, we’ll withdrawal $90 in cash from our bank account. This will be our only spending money for the entire week. We’ll have to work extra hard to stay within our grocery budget, and if we go over, it’ll reduce the amount we have for entertainment and other expenses. I’m anticipating that we’ll spend $60 or less each week on groceries, $20 on household expenses, and $10 on entertainment.

Our idea for a cash budget for the summer was inspired by Small Notebook’s “no spend month.” It’s essentially the same concept, only we’re not limiting our spending quite as much as her family does so we can maintain it over three months instead of just one.

As an incentive to hang on to as much cash as we can, we’ve decided that whatever cash is left at the end of the summer will go to something fun. We’ll see how much is left before we go making any plans with it. :)

I initially decided to pause saving for the summer, but based on this budget, we’ll be able to save $250 a month (about half of what we normally save). At the end of the summer, we’ll be able to put the $2,000 we saved to supplement our summer income into our regular savings.

I’m a little nervous because I’ve struggled with cash spending in the past. But we’re really excited to take on this new challenge! I think it’ll be a good exercise to get us back on track. For the past few months, we’ve been a little too comfortable. Each month, we go a little more over budget on things like food and shopping. Hopefully this summer will get us back on track.

Our no spend summer begins this weekend. Any tips on how to make a cash budget work?

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