Budget hack: gift yourself

I recently completed a spending audit for one of my clients, and my top recommendation out of that audit might surprise you: buy some gift cards.

Let me explain.

Most successful habit management techniques are founded on the idea of adding or subtracting friction. The concept is that you add friction (whether difficulty or active penalty) to behaviors you want to do less, and remove friction from (or add incentives to) behaviors you want to do more. If you want to watch less TV, keep the remote in a different room. If you want to exercise first thing in the morning, lay out your exercise clothes right next to your bed. If you want to quit smoking, make a bet with your best friend that you’ll donate to a charity you hate if you ever touch the cancer sticks again. You get the idea.

Spending management can benefit from the same approach, but it can be challenging to add friction to your money life. A major reason for this is that our consumerist overlords have created innumerable conveniences that make it as easy as possible to spend money without thinking about it. With Apple or Google Pay on your phone, you don’t even have to open your wallet; with a smartwatch, you are a literal handwave away from parting with hundreds or even thousands of dollars.

Successful money managers are often people who find a technique that introduces a little (or a lot) of friction to their spending decisions, whether that means deleting all their saved payment information from their web browsers, carrying around a stack of cash envelopes, or choosing to be accountable to a budgeting app. As we’ve mentioned before, there are a whole lot of traditional budget approaches:

  • DIY accounting: this is where you personally track, shuffle, and otherwise manage your money, using pen/paper or a spreadsheet, and sometimes helped by a tool like this.
  • An automated app-based solution, like:
    • Mint, which we have personally used since 2014, which is not perfect and which I love anyway.
    • YNAB. Gotta be honest: I tried YNAB and it didn’t quite work for my brain well enough to switch, but it has legions of enthusiastic followers. If you love YNAB, tell me why! I would love to be able to share the “pros” from someone who’s got it figured out.
      That offer goes for anyone who’s got a budgeting platform or method that’s working for you and a willingness to share about it. Our brains and households are all different, and we’re just one household; what works for you might be exactly what someone else needs to hear!
  • The multiple account semi-automated approach: this is where you use two or more checking and/or savings accounts to separate out your fixed/critical expenses, optional/flexible spending, sinking funds, goal savings, and literally anything else that you might want to create a separate account for. If you like this approach, it’s essential to make sure you avoid the type of overdraft protection that automatically drafts from a second account (otherwise it won’t hold you accountable; you need to hear that “declined!”). You also want to make sure you are only using accounts that have no overdraft fees.
    • This approach can be manually managed by moving your own money around, or set up with automatic transfers.
    • If you find yourself dealing with any executive function challenges like ADHD, this strategy might be more effective than you think. Apart from setting it up and occasionally checking in, it can require relatively little attention.
  • The cash envelope system: not for the faint of heart, this system involves taking out physical cash and putting it in physical envelopes to make purchases and pay bills. When you do this, you can see exactly how much cash you have for that grocery run or gas fill-up.
    • Much has been made of the fact that paying with cash instead of card induces more pain (in reality, the situation is a lot more nuanced than that!). However, it appears that the feeling of parting with a limited cash resource can induce some reluctance even in the best of circumstances, which can really work for some people.
    • Some people love cash envelopes, and if that’s serving you, fabulous; personally, carrying too much cash stresses me out and makes me feel less organized with my spending. I like computers and online shopping and don’t mind using an app or a website to check on my remaining funds. But if you like to keep things analog, this might help you!

Many people (including the Fortuna family!) wind up with a hybrid system that incorporates elements of more than one of the above. I had a checking account just for fun money for awhile; Mr. Fortuna likes to keep his fun money mostly in cash. Mint’s been great but there have been times where we’ve needed to noodle out our money stuff on a spreadsheet. I have yet to find the perfect app that works for everyone in every situation, but there’s more than one way to eat this Reese’s!

When gifting yourself can help

Here’s the thing: when you first start budgeting, it can be challenging. I get it. I think it took us about three months to get things running smoothly. (A good spending audit can give you a running start, but the Fortuna family didn’t know that eight years ago!) You need time to see how your spending responds to tracking, and how effectively your tracking categories actually reflect how your brain works.

These days, I’d estimate we spend less than two minutes a day (on average) checking transaction categories, and another 15 minutes 2-3 times per month having a budget meeting. At the beginning, end, and sometimes middle of the month meetings, we talk about what to do with surprise windfalls, whether we need to modify our spending decisions, where to cash flow unexpected expenses, and—my favorite part, and something I’m almost unnaturally good at—going through our line items and finding extra unspent money at the end of the month to put towards goals and fun. The fact that I find this fun and exciting is a big sign that I am a nerd part of how we paid off our house early; some of you may know that I was a stubborn, recalcitrant spendaholic who had to be dragged kicking and screaming into budgeting. But when you get me on board with a goal, watch out!

So you’re trying to get your spending under control now. And you find yourself continually spending too much in a given category or at a specific vendor.

Here’s what you do: you buy yourself a gift card.

Let’s say you love getting food delivered by an app like Doordash. But, let’s also say you realize that many restaurants price things a bit higher on Doordash to make up for the fact that Doordash charges commission fees… and that with app charges, delivery fees and tips, you are spending quite a bit more on your carryout habit than you’d realized.

You can set a limit off the cuff, or you can take a good look at your last month or three of spending, and identify a target from there. It can be realistic, if you just want to save a little, or it can be bare-bones, if you want to save a lot.

Then you buy yourself a gift card for that amount, and you load it into your app or stick it in your wallet, and tell yourself… that’s it. That’s your limit for the month.

This approach requires you to be willing and able to keep commitments to yourself right now, which is no small thing. If you know that you’re currently most likely to immediately cave and cover the overage with your credit/debit card, this method probably won’t be as effective. I would recommend going for a higher-friction method like the multiple accounts approach described above, or looking into accountability support from a friend who supports your big-picture goals enough to call you out.

And don’t beat yourself up if you feel like keeping self-commitments is hard for you right now. Self-trust requires us to be gentle with ourselves, and to learn from our mistakes by honestly recognizing them. Self-trust is a type of strength that can be built, and part of how you build it is by creating a body of evidence that tells you that you are capable of showing up for yourself. It starts small.

If you’re currently someone who can keep a commitment to yourself as long as it’s there staring you in the face, give it a try with your own spending challenges! Based on my personal experience with this method, the checkout page for the apps and websites for Doordash (and Amazon and Sephora and Starbucks) will tell you your remaining gift card balance once you’ve loaded it into your account. This is a much quicker way to find out how much is left in your budget for that particular vendor than “let me open my money app, sign in, and wait for it to load” or “I’ll check my budget spreadsheet when I’m home but it’s probably fine.”

If this technique works for you this month, you can repeat your success the following month. Many vendors will allow you to re-load your gift card, or purchase a new one and add it to your total “gift card balance.”

If you have a broader/multivendor category that you’d like to cover (like “eating out in general” or “clothing shopping but I don’t know what stores I’ll be visiting”), you can always go for a Visa Vanilla/Mastercard gift card-type-thing in an amount that makes sense for you. (Also, teachers love these as holiday gifts.)

  • If you’re a saver-underbuyer, this method can also help you to actually spend your money. If you’ve precommitted the money to allow you to actually do some fun shopping for once in your frugal life, you’ve given yourself permission to spend it! Go nuts, savers!

When you build stronger budget muscles, you’ll likely welcome the fact that checking Mint (or your method of choice) slows down impulse purchases, and helps you make measurable progress toward your goals. But like all strength training, it takes a little time to build up. In the meantime, buying yourself a gift card may be a gift to your well-being in more ways than one.

Potential downsides of gift cards

This approach works best as a “preloaded spending” technique to help you stay on track with a couple of specific vendors or categories. I am not saying that you should use a stack of physical gift cards to manage all your spending needs. Here are some potential pitfalls to be aware of as you figure out whether this might fit your situation:

  • Some gift cards, particularly the Mastercard/Visa type, have charges or activation fees associated with them. They’re usually small ($3 or so), but it’s kind of like paying an ATM fee.
  • Some apps don’t automatically tell you the balance of an e-gift card, and physical gift cards certainly don’t, so you have to check it before you check out. This is a little extra friction—but as we’ve discussed, that’s not necessarily bad.
  • You can wind up with underused money if you don’t spend precisely the amount on the card. This is more of a problem for a one-time splurge fund than a regularly reloaded spending card for a vendor or category that you frequently use.
  • If you’ve gone with a physical card instead of an electronic option, it’s possible to lose (or simply lose track of) a physical card, and then there’s the issue of fitting too many cards in your wallet.

So, again, this is really for apps or stores where you regularly spend more than you would like, and that you need to add specific friction around.

Caveats, etc.

If you’re like “this sounds like too much work,” ok. Do you have another budgeting method that is helping you reach your financial goals? Awesome. All I want is for you to be financially unstressed and empowered! And if not… well, it can also be a lot of work dealing with the costs and consequences of winging it. (Costs like US banks raking in $15 billion a year on overdraft/nonsufficient funds fees.)

Humans are famously terrible at estimating all kinds of things; most of us are overly optimistic about how much money we spend until we’re confronted with the data. The right tool takes a lot of the willpower and logical fallacies out of your financial life, and it allows you to start making decisions based on data, and not just on your best guess. Making it just a little more work to spend mindlessly can put some helpful guardrails up to keep you on the road to your goals. If you’d like some support around finding an approach that suits your brain and auditing your spending so you know where to start, please reach out.

And the standing caveat: you can be unbelievably frugal by every meaningful standard, and still not be able to budget your way out of poverty. At that end of the scale, increasing your income is the single most meaningful way to improve your financial well-being, and I recognize that can be easier said than done. This post is aimed at someone earning enough money to support their needs and at least some wants, but struggling to keep their spending aligned with their goals. If that’s you, some type of transaction management, spending tracking, or budgeting can help you level up and make real progress.


Do you have any weird money management hacks that work for you? Drop a comment or contact us! And if you’d be interested in a spending audit, reach out. We’re developing it as a service and pricing is currently flexible for beta testers. If you feel overwhelmed at the prospect of going through three months of spending to figure out where the heck your money went, why not let me and my spreadsheet skills do it for you?


Photos by Lum3n, Karolina Grabowska on Pexels.com

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