Good news: You don't have to sacrifice style just to pay your electric bill. Kathryn Finney, a.k.a. the Budget Fashionista, is the expert on all things chic and cheap. Now she opens up her Prada bag of shopping and style tips to make you fashionably frugal, with change to spare. It's as easy as 1-2-3!

1. Know your budget: Learn innovative, money-saving ways to increase your clothing funds.

2. Know your style: Get helpful hints from fashion insiders and use them to develop your own mode of self-expression.

3. Know your bargains: Discover the art of scoring exclusive friends-and-family coupons for your favorite department stores.

Whether you're a homemaker from Houston, a grandma from Grand Rapids, or an M.D. from Manhattan, you don't need to break the bank to look your best. With great cost-cutting tips, at-home spa secrets, designer discount websites, and access to exclusive deals, The Budget Fashionista is like having your own personal stylist at your beck and call. So before you go out and commit the eighth deadly sin — buying a fake Louis Vuitton — read this must-have guide and learn to be style-smart and budget-wise!

Chapter 1

Like the whooping crane and great-fitting jeans, budgeting is now extinct. The rise of credit and debit cards has made items that our foreshopping mothers had to wait months to purchase as accessible as whipping out our plastic friends — a major reason so many fashionistas like myself are in debt. Managing your money, including credit, is as big a part of being a budget fashionista as bargain shopping at the local discount store.

Somehow we've lost the art of shopping anticipation. Gone are the days of layaway, when stores allowed you to "hold" items for months, paying set amounts in cash until the purchase was paid in full. Even if you are a stellar budgeter, you've probably fallen prey to "buy-it-now-ism." Take a moment and think about the last time you actually saved up for something. If you can remember that far back, remember the sense of pride and accomplishment when you saved enough to purchase the item. The immediate reward for saving was the satisfaction of knowing that the item you purchased was completely yours. The ultimate reward was better credit.

Looking fabulous and reducing debt are not mutually exclusive. In this step I'll show you how to do both at the same time. All it takes is a little multitasking and some discipline. Even if you're someone who looks forward to balancing your checkbook, you'll learn innovative ways to track, save, and earn more dough, like the Saver's Rule and hosting a clothing swap party.

In the first chapter you'll learn how to develop your budget skills and ways to infuse much needed dollars into your monthly budget. By resurrecting the lost art of shopping anticipation, having a clear picture of your financial situation, and realizing that a pair of Manolo Blahnik strappy heels does not constitute an investment in your retirement fund, you will have not only a more secure future but also more money for shopping.

If you're like me, you're probably tempted to skip this step and head on over to "Step 2: Know Your Style" (page 39). Many of us dread creating a budget as much as we dread going to the gynecologist. I mean, who really wants to be on a budget? However, the thing you dread most (creating a budget) is exactly what is going to help you be fabulous for less. Read this section and find out how.

Budgeting 101

Raise your hand if you have ever experienced consumer cramps. This is not to be confused with the "other" cramps. Consumer cramps, a.k.a. buyer's remorse, is the feeling you get in the pit of your stomach when you purchase an item that you know will wreak havoc on your finances. Consumer cramps come when you spend, say, $800 on a designer bag and realize that you now have barely enough money for the rent. In my case, buyer's remorse is spurred on by the excitement of a sale. Like the time I purchased a beautiful black cardigan at Macy's one-day sale, got home, and realized that I already had two similar beautiful black cardigans in my closet.

Budget Fashionista Tip #2: Keep the Receipts

Save all tags and receipts for at least two weeks after you purchase an item. Go to your local Office Max or Staples and purchase a coupon or bill folder. Number each tab in the folder according to the days of the month and place your receipts in the folder at least three days before the last day to exchange or return the item.

Learning how to spend and save wisely is the Advil for consumer cramps; you will enjoy a lifetime of relief. In this chapter you'll learn how to create a budget that is both savings and shopping friendly. At its end you will feel empowered to make the financial changes necessary for becoming a budget fashionista!

Telling a fashionista not to spend money on designer clothes is like telling the sun not to rise. It's just not going to happen. Fashionistas love to look great, and, unfortunately, that does cost some money. However, the most important element to looking great is style — something you can't buy. No matter how many Manolos you have stuffed in your closet, you won't look good if you can't afford a pedicure to remove the crusty dead skin from your heels. Having a Louis Vuitton bag won't increase your style quotient if you're so broke that you can't afford a studio apartment on skid row.

The Budget Fashionista Explains: Why You Should Start a Budget

Budget fashionistas know how to manage their checkbook and their closets. They know that sometimes they might need a little extra help, such as when I sought the help of a financial adviser to help me manage my financial assets. She helped me realize that the $50 U.S. Savings Bond my grandpa gave me when I was twelve didn't constitute an established savings plan.

Thank God for financial planners like Janine Moore. This financial diva, a founder and a principal in Peak Financial Group, LLC, understands the lure of a good sale and the constraints of debt. While attending Ohio State University, she rang up over $5,000 in credit card debt shopping at JC Penney. Developing a budget helped her rein in her expenses and get rid of debt. Janine offered these five reasons fashionistas should develop a budget:

Reason #5: Buying a house is impossible if your credit is jacked.

Reason #4: Dodging creditors' calls is no fun.

Reason #3: Saving a little now beats saving a lot later.

Reason #2: Having plastic surgery done on your credit cards is less painful than having it done on your body.

Reason #1: Having more money to spend on yourself is feasible if you don't have any debt!

During the summer of 2005 I conducted a somewhat scientific survey of the over fifteen thousand active recipients of The Budget Fashionista newsletters in an effort to find out what is "normal" in regard to shopping, budgets, and purchases. More than eight hundred fashionistas responded to the anonymous survey, and their true shopping confessions are placed throughout the book. What I found out was that when it comes to shopping, one size doesn't fit all. Respondents' shopping budgets ranged from a paltry $25 per month to an excessive $3,000 a month. What you spend per month on clothing is, and should be, a function of your job, your geographical location, and your personal finances. The Saver's Rule can help you figure out how much you should be spending per month on shopping.

Budget Fashionista Tip #3: The Saver's Rule

Here is a little-known fact: The more you save, the more and longer you will be able to spend. Budget fashionistas must save at least as much as they spend on clothes per month. For example, if you have $250 after paying all your expenses, at least $125 of it should go into your savings account. Deposit the other $125 into a completely separate

interest-bearing checking or savings account with its own debit card and checks, to be used specifically for shopping. That way you will be able to keep track of the money you spend on clothes.

Opening an interest-bearing savings account for your shopping funds is quite easy. If you have an existing relationship with a bank, ask one of the personal bankers if the bank has shopping savings accounts. These are special accounts that sometimes have slightly higher interest rates than a traditional account, allowing shoppers to save toward big purchases. If your bank doesn't have them, just open a regular savings or checking account dedicated solely to your shopping purchases.

Copyright © 2006 by Kathryn Finney. Excerpted by permission of Ballantine Books, a division of Random House, Inc. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.

Tags: Beauty, Fashion

About the Author

My name is Kathryn Finney and I'm the Budget Fashionista. I was born in the heartland of America, where as a budding fashionista, I set fashion trends despite -30 degree weather and a Wave Noveau curly perm (a.ka. fancy Jheri curl). I moved to the east coast to attend college and after eight years as a serial shopper, budding politician, and Ivy League-educated epidemiologist, I was totally broke. How broke, you ask? Let's just say my first born child will be named Visa Student Loan.