What’s Eroding Your Savings Potential?

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Life is expensive, and much of the money we make is allocated to things like mortgage payments and car payments before it even hits the bank. But every cent you spend is a cent you didn’t save. So if there seems to be a disconnect between your budget and your bank balance, it may be time to get out the magnifying glass and make like Sherlock Holmes.

Time to do some legwork: track your expenses to the penny for a month to get a sense of who the culprits are. It could be that daily coffee that grabs your wallet on the way to work. Or the crap-at-the-counter that dips into your purse when you’re going through the checkout. Maybe it’s an expense you’ve assumed need always remain the same: car or house insurance, or communication costs.  Comparison-shopping on fixed expenses can save you big-time, so make the effort to find a better deal.

Perhaps your problem stems for not understanding the motive for the crime of overspending. Are you so tired from a hard day at work that you can’t be bothered to make dinner? As much as this looks like pleasure spending, it isn’t. You’re trying to compensate for no time and no energy. If you don’t want the solution to your no-time/no-energy problem to cost you big-time, you need to recognize the real problem and come up with a solution. Would meal planning, batch cooking and freezing one weekend a month eliminate the ordering in that suffocates your plans to save?

Or maybe it’s your modus operandi: you get bored, you go shopping; you get depressed, you go shopping; you want to spend time with your girlfriends, you go shopping. Recognizing what pushes your buttons or how you feel when you buy something new and changing how you do things could be the ticket to rescuing your savings goals.

It’s easy to let your money escape and then moan about having nothing left to save. But if you’re serious about saving, you’ll put in the time to figure out the crimes you’ve been committing against your budget so you can find the money to save.

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Gail Vaz-Oxlade

Gail Vaz-Oxlade wants YOU! Join MyMoneyMyChoices.com to get smarter about your money and help others get smarter about theirs. Isn’t it time we eliminated financial illiteracy? Come find me on Google+ and on Twitter.

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20 Responses to “What’s Eroding Your Savings Potential?”

  1. Great post Gail. So true. I saved a significant amount of money by switching my bank, and insurance companies, getting rid of cable and land line, and switching my internet provider. It all took time and effort to research and arrange, but I have saved almost $400/month. That’s $200 more each paycheque that is available to save.

  2. We are mostly retired, so in a different stage in spending/saving. However, although my occasional income is very little (don’t count it as income on budget) still able to save a little. Main goal now is to spend as little as possible. Always ways to cut back. Not ready to give up satelite dish – but looking into cutting it back. Already cut back re: phone, cell phone, long distance plans etc. etc. Used to spend more on coffee, clothes etc. when working more.

  3. @Debbie, you can call your satellite provider and request a short-term cancelation of service. You’ll be put on a very basic 2-3 channel plan to carry your account during the hiatus. Try it and see if you can handle the reduced service and kick the TV habit. Summer’s the best with nothing good on the tube and fine weather outside. Then bank the subscription savings!

  4. I’ve been tracking my expenses and keeping them organized into spending patterns for about 10 years now. It’s my compass that tells me where I stand and if I need or want something, focuses me to the optimal way to plan for it.

    When I hear a family member or close friend blurt out “I can’t afford THAT”, I simply say “I track my spending and that allows me to afford the things that are important to me”.

    Usually stops the conversation – I wonder why? ;)

  5. Debbie
    As M pointed out you can go on a vacation break from your satellite dish. We are with Shaw and a couple of years ago I installed a small rooftop antenna. Shaw allows up to 150 days “vacation break”. We go off line from May to mid Oct at no cost. There is enough stuff on the antenna to get our TV fix plus we get DVD’s from the library. We watch a lot of older British series! We bank the money from the summer break and come fall get a upgraded package which allows us to get a few specialty channels. It averages out to $40 per month spread over the entire year. Still to much in my opinion but tolerable.

  6. My husband and I don’t spend a lot of money on ourselves, no hair salons, no name brand clothing. The one thing we did do is go out for dinner once or twice a month, and get take- out probably once a week. My husband also bought a coffee every morning on his way to work. We decided to put a stop to all that, and now we only go out for special occasions, and the take-out has virtually stopped. I’m cooking a lot more lately and what we are putting into our bodies has improved significantly.

    In just 6 months we managed to save $2000.00 to put towards our mortgage! This money was in the budget for entertainment, and we could have spent it had we wanted to, but I’m so glad that we decided to save more instead. We are continuing to stay away from this wasteful spending, and we are on track to making another extra mortgage payment!

  7. M and lew – might be a possiblility to cancel dish in summer if I was single, but don’t think husband would go for it and I am not sure I would either. Thanks, anyway

  8. Hubby ended up on Worker’s Comp and I’m disabled but qualify for CPP at all. I was a stay at home mom, so no pension for me. We are crunching big time as we spent and lived well when he worked, but being off work now on WC, it’s tossed 1400 bucks out the door and we are now living that on that much less. And we were close to the line before. Living paycheck to paycheck. I have cut back on TV, phone, canceled the daily newspaper, sold things online and right now cut down on life insurance where it would still help if something happened and could get me through in a tough time. I can’t cut anything more. We have only 1 vehicle insured, and we don’t go anywhere or eat out at all. So TV is our main entertainment. We have 100 bucks to buy groceries with after bills to last 2 adults for 2 weeks. There is nothing extra. We are behind in mortgage payments even. Tough, but we will get through it. The saying when it get’s tough the tough get going. I now realize that when you have the money don’t go overboard because there will come a ‘crunch’ time when it all hits. This has made me totally redo everything and see what we can do without. Talk about making batches of food to eat, no specialty items, no munchies etc.

  9. We got intense about debt last June. we went from having nothing at then end of the month and $45,000 consumer debt, to paying it all off in 5 months, experiencing a loss of 45% of our income due to an accident with is still not resolved, as injuries are still not healed from 8 months ago. We cut back. Sat down looked to see where our money was going, sold vehicles and purchased cheaper more efficient ones, cut the food and entertainment budgets. We are still at reduced income but have no consumer debt despite the accident and have manage to build some savings and emergency fund. We trimmed where we were comfortable. We could save more, but we choose not have data plans, no fancy cars, staycations, sacrifice a higher paying job for me to be a sahm, but keep satellite and internet. If needed, cells would be next to go, then satellite. Internet is used for school so it would stay but downsized.

  10. I don’t know Gail. This is a tough one for me. I will keep on reading and in the hope and pray that something, somewhere, sometime will click as I am sure it will. I have faith it will. I Love your articles btw
    Hugs

  11. I track all my expenses and the biggest thing that would make a difference to me is being paid more money OR giving up eating and living on the street. I get that sometimes people make unwise choices with respect to money but there are a lot of people who are just not being paid enough and this, in combination with rising rents, utility bills, transit … essentially the increased cost of basic necessities is why some people are struggling. I wish sometimes this blog would draw attention to the dramatic increase in income inequality rather than repeating the mantra about saving – the latter is important but it’s not the only factor.

  12. avatar Cassaundra Says:
    June 25, 2014 at 4:41 pm

    I think one of the biggest expenses that drain my budget is my mid afternoon “coffee” break at work where i get “snackish” and seem to head for a bottle of pop and a bag of chips. At times it also results in a magazine or some sort of impulse purchase. I’ve been working on curbing this break to be a Tea made in the office and a walk around the block and some fruit from home.

    I would love for us to have a “vacation” from Satellite – last year though it took a lot of sweet talking just to get my other half to agree i could remove some of the extra channels. Now he states they aren’t missed but he was reluctant at the time even though it lowered our bill by approx $30 a month

    Every few months I supplement my income by taking on hours at a local hotel on weekends or taking on a temporary part time job. This is for our “extras” that we like to be able to do. Such as for Hockey Trips with Minor hockey out of town, a visit to family, Christmas gifts or even just a camping trip.

  13. avatar Eric S. Says:
    June 26, 2014 at 9:10 am

    I’ve followed Gail for a long time now and have been tracking my spending as well.
    So my big problem is family & events of all kinds (weddings, showers, kid and adult birthdays).
    It seems that every so often, when everything is paid for and that there is a surplus of money that I can add to my savings, I receive an invitation to family or friend event.

    This then leads me to feel a loss of control and creates a million and one question;

    How much do I spend?
    If its direct family, how much should i give/purchase?
    Is my amount I spent on the gift enough?

    If I can’t make it do I send a gift instead?

    I sometimes feel like I do not have any good answer when it comes to direct family events. Even if I didn’t have money for gifts, showing up empty handed is not good option (I can confirm this from previous backlash/experience).

    So basically my options are: if I do go (they expect a good gift), if I do not go (they expect an even greater gift).

    I know it shouldn’t be like this, but everyone wants to pretend their family is perfect and they assume that gift giving is the minimum. Having fun and being together ….I guess it comes second.

  14. @ Eric S.

    We put $40.00/wk aside for gifts. We have a lot of kids in the family, and there is always a birthday, graduation or event going on. We also use this money for hostess gifts when we go to someone’s house for dinner. A bottle of wine and a dessert can run anywhere from $20 to $50!

    Right now we have just over $200.00 put aside, and we have a kids birthday coming up in July, and a wedding in August (weddings are the budget killers!), so by the time the wedding arrives, we should have enough in the jar to cover it.

    The key is to set a limit for gifts, and yes it does depend on how close you are to the recipient. You may set a higher limit for family than for friends,(or visa versa if you like your friends more than your family!). If you set a limit, and you calculate how many gifts you need to buy throughout the year, and throw in about 10% extra for those unexpected surprises or invitations, then you will be much more prepared to handle those expenses. Your budget has allowed for that money to be set aside for this purpose, so you don’t feel like you are taking away from your savings. If at the end of the year you find that you have money left in the ‘gift’ jar, then you can put it towards savings. We usually run out or have just enough. I never feel like it has eaten into my savings.

  15. Diane- I do the same – that jar includes gifts, clothing, hairdresser and clothing and funeral flowers etc. – I put away 35/week and it seems to work out even though it does not seem like that much. We limit gift spending. I estimate for my yearly budget and divide by 52.

  16. Eric S. that is a very frustrating situation. I have scaled back dramatically on gift giving and if people ask what I would like I tell them “Nothing, I don’t need anything. It’s nice just to hear from you” or “Let’s just go out for coffee”. The whole gifts for every occasion has gotten so out of hand anyway and perhaps you could just bring a nice bouquet of flowers or something from a farmer’s market. Honey with bread, carmel with apples. It’s all about presentation. I’ll be the first in my family to make waves by not reciprocatiing with equally expensive gifts, if anything at all. I just don’t believe we need to go into debt to buy ‘stuff’ for everyone. We cut watching tv all together since most of it is commercials and reruns anyway.

  17. Many people may feel hurt if they do not receive a gift. Gary Chapman in his book, “The 5 languages of love”, writes that receiving a gift is one of the love languages. How might our friends and family feel if we do not express our love through gift giving? I only want to point this out as a complication to not giving gifts. The four other love languages were: 1) words of affection, 2) quality time, 3) acts of service, and 4) physical touch. If a loved one prefers one of these other types of love languages, we show our love and save money.

  18. I’ve just gone through the Owning up to your Debt worksheet and was truly disturbed by the amount of money spent on items that were thought to be necessary. I’ve also begun to track every dime spent. Lunches are the worst. Working from 7 – till whenever, if there’s a break in the day, its a relief to get out and smell the coffee and salads. I have a second job – self employed which takes up even more time and coffee. So knowing where the weaknesses are, curbing them and weaning off is my way of controlling the extra spending.

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