If buying 3-ply Kleenex tissues with lotion is wrong, then I don’t want to be right!

There was a point in my life where I’d feel guilty about indulging in such a purchase. After all, the cost per tissue is nearly three times the cheapest alternative. No more. Now, I’m a luxury nose blower…and an unrepentant one at that.

Anyone—even the cheapest of cheapskates—can indulge in guilt-free spending once they’ve clearly identified how much money remains for frivolous purchases on a daily basis. But what about monthly budgets? My difficulty with these: They never gave me the guidance I needed when I was down in the trenches. Instead, I was always left with lingering internal uncertainties, like:

• “I feel like I’ve been eating out a lot recently. Is this a problem?”
• “The wine here seems expensive, but that’d be so delicious right now. Should I indulge?”
• “Should I pay another $20 per month for faster internet?”

When I shifted to a daily approach, these uncertainties evaporated. I could make judgment calls like: “I can afford to blow $50 a day on whatever I feel like. I’ve spent $30 today. Therefore, I’m totally fine. Waiter…wine please!”

You can reach this clarity via four simple steps.

• Step One: Establish your financial goal(s)
• Step Two: Record your recurring income and expenses
• Step Three: Record your account balances
• Step Four: Calculate…on a dollars per day basis

Example. You want to buy a car in 200 days for cash. It costs $10,000 and you’ve got $8,000 stored away for the purpose. Since you need another $2,000 and have 200 days to generate that, you’ve got to save $10 per day to reach the goal. Now, your daily take-home salary is $120 and your daily recurring expenses are $50. Since all numbers are now on a dollars per day basis, you just take $120 (income) – $10 (required savings) – $50 (recurring expenses) = $60 a day. Tada! You can spend up to $60 a day on whatever you want and still buy your car in 200 days debt-free. Liberation!

While your financial life is more complicated than this example, the spreadsheet above easily works with your amounts to reach this same level of clarity. Play around with differing dates and amounts to see the impact. In other words, we’re bringing unflinching spreadsheet accountability to your dollars!

While the image above is a fun visual, I recommend clicking here to download and manipulate your very own spreadsheet file.

Step One: Establish your financial goal(s)
Determine what you want, how much it costs, and when you want it. Then, it’s just simple division (dollars / days) to determine what you need to save. The math may be simple, but there’s magic in proactively recording, calculating, and pondering the implications of your goal.

Many choose to orient their financial planning around their most significant medium-term goal, whatever that might be. Goals I hear from my peers sound something like:

• Reach a “safety net” in the savings account of 3-6 months of income
• Accumulate $50,000 for a down payment on a house / condo
• Store up $35,000 in liquidity to quit job and start own business
• Save $30,000 for wedding
• Gather $20,000 for grad school
• Eliminate $15,000 in college loan debt
• Donate $7,000 this tax year to key nonprofits
• Stash away $2,000 for a sweet trip to Asia

But in order to make the $$$s relevant in life, you also need to specify the precise date (e.g. September 20^th, 2010) where you need each pot of gold.

If you have multiple smaller goals, you can automate your checking account to move the appropriate amount of monthly dollars into separate savings accounts. Then convince yourself that those monthly movements are as immovable as your monthly rent or car payment (see next step).

Step Two: Record your recurring income and expenses
Recurring expenses and income aren’t daily choices, but they impact what you can spend on a daily basis. (To lessen that impact, I recommend you learn how to “negotiate like an Indian” from Ramit Sethi). In the meantime, you can get a quantitative handle on them by determining their amounts and timing. Input your:

• Rent / home payment
• Take-home salary (AFTER a healthy 401k contribution, but that’s another story)
• Car payment
• Cell phone
• Internet
• Cable
• Gym
• Groceries
• Insurance

…and anything else. Also note the timing. Are these semi-monthly, monthly, quarterly, or annual expenses? The spreadsheet has a convenient dropdown that generates the appropriate number of days to convert all figures into a daily basis.

Step Three: Record your account balances
You’re probably not starting from zero. So go ahead and hunt down how much money you’ve got hiding in your different accounts. Be sure to capture:

• Checking accounts
• Savings accounts
• Mutual funds
• Retirement funds
• Credit card balances
• Debts
• Odd adjustments (e.g. loans to/from buddies)

Step Four: Calculate
With all your financial data in one place, you can readily see how far you are from your goal. Your basic formulas are:

• Remaining dollars = goal dollars – current dollars
• Daily dollars to save = remaining dollars / days until goal deadline
• Daily play dollars  = Daily income – daily dollars to save – daily recurring expenses

If that’s intimidating, don’t worry, the spreadsheet does it all for you!

Once you start thinking and playing with this dollars / day perspective, you start to understand at a gut level the impact of decisions. It can really be a slap in the face: “So, if I got a roommate and paid $300 less in rent, I could buy three extra lattes a day and it’d be a wash.” At the same time, be cautious and note that not all days are built equally. Weekends are probably pricier than weekdays. I recommend establishing your $$s per day play money by day of the week. So, if your number is $50/day, you might spread your weekly $350 out Monday/Tuesday/Wednesday/Thursday = $30. Friday/Saturday = $70, Sunday = $40 for $300 total in a typical week and leaving $50 leftover for random weekend trips with elevated expenses.

Of course, there’s a fifth step: Do it! If you’ve captured all your financial items in one place, the numbers won’t lie. Spend less than your dollars per day for play, and you will inevitably reach your target. No magic…just clarity on goals and accountability.

And if you really want to make sure to get there, bring a buddy along for the ride. That’s right, I dare you to Team Up and bare your assets regularly. If you do, you’ll have a motivating force to overcome daily spending temptations…and you can blow your nose on the finest of tissues with wonton abandonment.

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