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How Do Clothes Fit in the 50/30/20 Budget?

Budgeting is tedious. And figuring out the 50/30/20 budget when you love clothes? Too limiting. Some might even say it’s awful, something worse than listening to cats fight. But now is the time to make a habit of setting caps on your spending and living into those caps. If only because the economic outlook is incredibly uncertain. Plus, the steps you take to get more conservative financially today can benefit you for years to come.

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While there are apps that’ll help you track your spending, the hardest part of budgeting is figuring out how much you should be spending on different things. Knowing that you spend $800 monthly on food, for example, isn’t helpful unless you also know that a $500 monthly grocery bill is your target.

That’s what’s nice about the 50/30/20 budget. It’s a simple framework you can use to evaluate your spending today and make an action plan for the future.

Woman working on her 50/30/20 budget at home on laptop.

What’s the 50/30/20 budget?

The 50/30/20 budget does not take away your right to indulge. That’s one of the things I love about it. The framework allocates a healthy portion of your income to discretionary expenses. It also limits your essential bills to 50% of your pay — which gives you tons of flexibility, particularly in tough times.

Considering that unemployment income typically replaces about 40% of your pay, living into a 50/30/20 budget gets you close to surviving without credit cards if you lose your job. That’s huge.

Money for bills, savings, and fun

You can find tons of information on the 50/30/20 budget online, but here’s a quick overview. Start with your monthly take-home pay and add back your retirement contributions. The sum is your baseline income. You’ll divvy up that income into three buckets as follows:

  • 50% for essential expenses. This includes rent or mortgage, utilities, food, insurance, prescriptions, gas for required transportation, and minimum payments on your credit cards.
  • 30% for discretionary spending. Sorry, but your cable bill is discretionary. So is your gym membership, vacations, salon visits, non-essential groceries like soda and booze, and — yes — clothes, shoes, and beauty products.
  • 20% goes towards savings and debt repayments. Your retirement contributions are counted here, along with credit card payments above the minimums, and emergency fund savings.

I can guess what you’re thinking right now. How the heck do I get my essential spending down to 50% of income? If you live in New York or Southern California, your rent alone might be close to 50% of your pay.

There’s no easy answer here. You will probably face tough choices to make it work. You could downsize, move to a cheaper neighborhood, and/or implement extreme money-saving measures. Or, more realistically, you could hold your lifestyle steady for a few years as your income rises. Avoid all expensive lifestyle changes — like moving into a bigger, nicer place — until your income rises to two times your essential expenses.

Budgeting for clothes in 50/30/20

Now, for the question at hand: Where does my love for clothes fit in here? Clothes fall very securely into the discretionary spending category, along with many other things. The exact amount to allocate to clothes, however, is a source of debate.

Who What Wear recommends a clothing budget that’s 5% of your take-home pay. That’s a number I find shocking. If you bring home $50,000 a year, 5% equates to $200 a month. Assuming you are living into a 50/30/20 budget, that’s more than 16% of your entire discretionary spending allocation. Add in your salon visits and auto-shipped beauty products and there’s not much left for your cell phone plan, Wi-Fi, and red wine.

And if your essential expenses are currently higher than 50% of your take-home pay, forget it. You definitely can’t afford to spend 5% on clothes.

My advice? Limit your clothing spend to 2% to 2.5% of your take-home pay. That equates to 6% to 8% of your total discretionary budget, which is far more manageable. You can add in whatever you earn in cash-back rewards and loyalty points, too.

How to limit clothing spend

Budgeting for clothes is one thing, but kicking the retail therapy habit? That’s a different challenge. Here are five budget shopping strategies that have worked for me.

1. Renting

Try Le Tote or Haverdash. (See my comparison of Le Tote vs. Haverdash here.) For a flat monthly fee, you get a set number of garments delivered to you. You wear those pieces until you’re done with them.

Put them in the return envelope, send them back, and you get another box. If you’re the type who shops because you like to have something new on hand, renting scratches that itch.

2. Thrifting

Thrifting online or in-person is a fabulous strategy if you love shopping for the thrill of the hunt.

3. Designate one day of the week for clothing shopping

If you shop online to pass the time, try designating one day of the week for clothing shopping. Say it’s Saturday. The other six days you’re not allowed to shop. You can make a list of garments you want, but you can’t buy anything.

This is essentially the same thing as a spending freeze. It forces you to wait on purchases so you can make buying decisions with a clear head.

4. Sell something before you buy something.

Having an addiction to clothes usually creates other problems — namely, an overflowing, unorganized closet. Address your messy closet and your clothing spend together by committing to getting rid of one garment before you buy another. You can sell the old garment or donate it, but you have to choose the piece you’ll kiss goodbye before you buy something new.

How does this help you spend less? Dig through your closet looking for something expendable and two things will probably happen. One, you’ll find garments you forgot you had. And two, the urge to buy something new will fade.

5. Tell friends and family what you want as gifts

There’s no shame in asking for what you want. If you want gift cards for Ann Taylor, ask for them! Really dying to have a sweater from J. Crew? Write down the specs and let your Significant Other know what’s on your mind.

Budgeting is not the worst thing ever

Budgeting for clothes — when you really love clothes — is not an easy task. Even harder is following that budget. But learn to love the thrill of buying used, the fun of renting, and the joy of receiving clothing gifts you asked for and you’ll probably realize you’re pretty good at controlling your clothing spend. Now if only you could figure out how to get the neighborhood cats to stop fighting…