How Lily Reduced Her Spending by $2,000 per Month

Around here we celebrate your money wins - big and small - each and every week. 🥳 Because taking steps, no matter how small, leads to more steps and our progress snowballs. It’s a beautiful thing!

And now we’re diving into a money win of your choice each month so you can get all the juicy deets.

This week we’re talking to Lily who reduced her spending by $2K per month by keeping a money journal and having Money Parties. Here’s our conversation.

First and foremost, HUGE congrats on spending $2K less (in 1 month!) after starting a money journal and creating a budget. It's so inspiring! How did you do it?

First, I used your budget template to categorize my spending from January and February this year, two months that had me STRESSED OUT when looking at my cc bill (I couldn't understand how it was so high and really wanted to get a grip).

I downloaded all the expenses from my various accounts/credit cards into a spreadsheet, categorized them, and then put the totals into the categories in your template.

Then, I assessed how much I'd like to be spending by month to enable me to put a certain amount monthly towards savings, assessed which categories it seemed that I was overspending on (some were shocking!) and refined my goal budget per category for March onwards.

Specifically, I was spending more than I realized on eating out, subscriptions (I found that I subscribed to Paramount Plus 3x at different email addresses ), and didn't have enough parameters set for how much I could spend each month on things I derive joy from but don't "need" like clothing/home goods/travel etc.

I immediately un-subscribed to a bunch of stuff I wasn't using (side note: I found doing this manually much more efficient than using Rocket Money, which was another subscription I nixed during this process as I personally found it confusing).

In my budget, it was important to me to not feel like I was depriving myself of the things that I loved so I tried to keep the goal # in each category such that I would feel freedom to do the things I enjoy each month, but with reasonable parameters.

I then decided to lump certain kinds of expenses into one category called "fun" which includes spontaneous travel (which I've separated from bigger trips that I'm planning for using your sinking fund tool), entertainment (concerts, movies, etc), clothing, gifts, and decorative things for my home.

This "fun" category was something that I refined over the first month as initially I had each category separated but found that it was more freeing to have one lump sum for the "fun" stuff so I could play around in a given month re: where I allocated that money -- I.e. one month might buy new clothes and not do a weekend trip anywhere, and the next might have a weekend trip that eats up a significant piece of the "fun" budget., so no clothes/concerts/etc that month, etc.

Then, I set up my money journal on a notes app on my phone. Not only did I begin to track every expense by day, which helped me become more conscious of my spending immediately, but I also created another section at the bottom of the note for the main categories that I need to keep an eye on to make sure I'm staying within budget as the month goes on and broke those up by weekly goals where helpful.

For example, I had a grocery/house supplies section where the total for the month was $600 but then I broke it down to be ~$150/week, so every time I went grocery shopping, not only would I put the expense in the money journal by DAY but I also added it to the grocery list and noted how much I had left for the month/tried to stay within $150/week.

If I went over in one category one week, I'd then try to make up for it the next week to keep the monthly total on track. Did this for other categories like eating out, fun, etc. This helped me track how I was doing each week against my monthly total, and adjust decisions accordingly.

I also set up text notifications for every transaction on my debit and credit cards. This way, I was seeing in real time random subscriptions/recurring payments come through that I might have forgotten about since I wasn't actually taking out my credit card.

Then, at the end of the month, I did the actuals for the month and updated your budget tool. The system seemed to really work like science!

Have you tried to do this before? What made the difference this time?

I've tried to do this before with budget apps like Mint, YNAB, etc but I found that the automation doesn't work for me, as it keeps me disconnected and allows me to not look at the app for weeks on end. The manual system of tracking everything in my note by day AND category and then doing the actuals at the end of the month in the spreadsheet feels more tangible and active to me in a way that keeps me accountable/precise.

I also think what's different this time is that I am more committed than ever to financial "adulting" and planning for the future, because I'm at an age where I'm starting to think about raising a family of my own in the next 5 years or so and am feeling committed to learning how to be more future oriented and less short sighted.

What motivated you to keep the money journal and start a budget?

It has been so satisfying to watch myself succeed at staying within the parameters I've set, and it now feels like it's just part of my daily habits to keep the journal. I am pretty obsessed with the journal tbh and think I might do it forever!

It also feels to me like a fun game that I'm winning at, now that I have a system that's working for me. So it's truly feeling fun and not at all like a chore. I think the out of control feeling before of not looking at my credit card statement for a few weeks on end and then having a mini panic attack every time I did created so much more anxiety than the more active attention I'm paying to my spending each day.

What's next for you as far as money goals?

Right now I'm reading your "Financial Adulting" book and trying to figure out my long term goals, which I'm pretty sure include buying a house in the next 3-5 years, starting to plan for retirement for the first time, and being able to afford one big international trip a year.

I need to start learning about and figuring out an investment plan, setting up a high yield savings account, and am trying to figure out how to best utilize your sinking fund tool to help towards some of these goals (I.e. figuring out if I have different savings accounts/sinking funds for different goals, etc).

How are you celebrating this win?

I haven't done anything formally (I should) but I have just been bragging about it to my partner and family 🤣

Thank you Lily for taking the time to share this tremendous milestone and Rachel C for this great idea!