You have our permission: give yourself a monthly gift! That’s right, when used properly gift cards can be a great way to stick to your budget, and have a little fun along the way…
1. Set parameters. When you buy yourself a gift card, you’re setting specific parameters for your shopping. So, you have a gift card for $100 at Lululemon? Guess what: you get $100 and that’s it. Be sure to leave a little extra on the card to cover sales tax, and don’t make the common mistake of spending more than it’s worth. (If you use the $100 gift card toward a $140 purchase, that is not a “deal”—you just spent $40 that you hadn’t intended on spending!)
2. Store-specific cards versus general pre-paid cards. In order to curb impulse buys, get as specific as you can. It’s all too easy to use a prepaid Visa gift card on miscellaneous extras. If you know you need new school supplies, load up a Staples card. If you need new pumps for work, load up a DSW card. Not only will it save you money, it will save you time, too, as you only have to hit up those few stores where you have a card!
3. Hit reload. Unless you’re hitting a late-in-life growth spurt, you probably don’t need new clothes every month. So try to only reload when you need something at that specific store. (Obviously, we understand that no one technically “needs” a new tailored white shirt for work, but if this is a staple of your work wardrobe then yes, for these purposes, you “need” it). At the end of each month, if you’ve stuck to your gift card plan, give yourself an extra 10% “fun money” the next time you reload your card to spend on whatever you want. (So if you’re reloading $100, you get $110—that’s enough for a fresh tube of lipstick!)
4. Take stock. At the end of each month, take stock of your budget to see where you’re at with expenses. (Our Easy Peasy Expense Tracker is a great way to get organized!) If you’re on track with both your spending and savings plans, reload your cards in order of priority as outlined above. Need new work flats? DSW goes first. Remember: gift cards are supposed to be a way to help you budget your spending, not a monthly shopping spree!
5. Just the right amount. The amount that you reload on to each card should be earnings and need based. Let’s say you make $3000 per month. We recommend setting aside 10% of that (so, $300) for “fun stuff”—i.e. shopping. From there, divide your “fun stuff” money onto the cards that need it most. Maybe this month you really need a haircut; the salon card goes first. Whatever is left after that goes to the next priority. And remember: if you did well last month, you get that extra 10%, too—in this case, $30 to get that manicure!