Reading Can Save You Money
Posted by John Draper | Filed under Bad Habits!, Good ideas, Money Management, Saving
When was the last time you went through your bills? I don’t mean just paying them. I mean sitting down and reading them to see what you’re spending your money on. I can’t believe the number of people with whom I work who don’t have Clue One where they’re spending their money. Man, we work so hard for it you’d think we’d take better care of it. But we’re lazy. We fall into habits and then never look for ways to break them, even when they’re bleeding us dry.
Buying newspapers is a habit. Sure, you need something to read on the way to work. Borrow a book from the library. Picking up magazines at the check-out counter is another habit. Again, go to the library, or, at the very least, subscribe and save 50%. Better yet, split your subscription with a friend and save 75%.
Okay, so we all have habits, and not reading your bills is one of the worst. People don’t read their check-out bills at the supermarket and spend a lot they don’t even know they’re spending when there’s an error. And they don’t read their bills at home either. They just pay them. Blindly.
When was the last time you looked over your phone bill? Yet you’re prepared to lay out hundreds of dollars a year on your land line. Never mind what you’re spending on your cell phone. Ditto your electrical bills, your gas bills, your credit card statements, your bank statement. I’m willing to bet you dogs to donuts right now that you can’t tell me what you paid in service charges on all your bank accounts last month.
Here’s today’s challenge: Spend one hour going over ALL your bills so you’re completely familiar with where your money is going. That’s right, gather them all up, get yourself a highlighter pen and start familiarizing yourself with where your money’s going. If you find places where you’re surprised at what you’ve been shelling out, it may be time to re-evaluate what you’re getting for what you’re spending.
Keep in mind that if you have auto payments set up, you may have to go online to get the itemized bill to see where you racked up those charges. Don’t wuss-out. Do it.
Are you paying to have movies piped in, but never seem to watch? Axe it.
Are you buying services at a premium? Move to a lower level of service.
Paying for membership at a gym that you haven’t visited in six months? Lose it.
Paid even $1 in banking machine fees? Stop it!
Got a renewal for a magazine subscription you never have time to read? Don’t just automatically renew it out of habit.
Look for all the things you pay for, but seldom use, and as you chop, trim, slice and dice, make a list of the money you’re saving.
Eliminate just $50 worth of monthly spending, and you’ll have $600 to add to your savings this year. Take that $600, invest it in an RRSP at an average return of 5%, and REINVEST your tax refund every year to make your RRSP contribution grow and in:
20 years you’ll have $29,610
25 years you’ll have $37,485
30 years you’ll have $45,360
35 years you’ll have $53,235
40 years you’ll have $95,424
… all from a measly little $50 a month. Can you imagine what you could do with $100?
Can’t find anything to trim? Really? Did you look really hard? Well good for you. It means you’re running a tight ship.
May 21, 2008 at 9:19 am
Hi Gail!
I soooo agree!! Since May 1st…I have a tiny notebook that I have now designated as” where I spent my money book.” By writing it down I realized that I am much more aware of where my money is going. I also like the fact that I can go to any date and see how much I spent that day. I have to admit I have a little game with that book…I try to see how may days I DO NOT spend a cent…Also, I did start re-evaluating my bills…I realized that I do have to find the time to see where my money is going and where are the areas that I can save. So I cancelled some of my phone services and now SAVE 25$ a month..that is 300$ a year!!! I have also started researching different insurance companies and have found that if I switch I will save over 700$ a month!! That is AMAZING!!! Finding ways to save money is also part of my game. THe more I save the more money i have in MY pocket as opposed to someone elses! I have learned that when it comes to money emotions must remain separate from the money…..meaning”I do not want to change from company A even if I get a better deal with company b because I do not want to hurt their feelings!!! As you you say WHAZZUP with that!!! I actually LOVE learning about finances….mind you sometimes i get confused with the jargon! Tha is why I even watch reruns of TDDUP….I would love to be qualified in the finances area in order to keep my finances in order but also to help others manage their money!! Take care!!
May 21, 2008 at 10:51 am
Love, love this blog Gail!
How true! I have an excel sheet that has all the months and every bill that we pay in it, including space for cheques written and for what – each time a bill is opened, examined, payed off, the amount goes into the excel sheet. The sheet also calculates the expenses for each month. It’s amazing to look back over the years at the past excel sheets to see how amounts have changed.
I keep all the reciepts for the credit card too, until the statement comes in, check and tick off the amounts to the receipts and pay it off in full. I’m afraid to carry cash, so I follow your idea with a small note book, that has the amounts on each page. So as I spend on my credit card, I put the amount spent under that page. Basically, each page is one jar.
Ooooh and those store receipts – got to keep your eyes peeled all the time – they make horrendous mistakes with pricing – like charging me $5 for a singe green pepper a week ago – hello – is there a gold nugget hidden in it?! Watch those receipts!
Super blog! Thanks Gail!
May 21, 2008 at 11:53 am
NKM, I’d also like to set up an excel sheet in the way you describe? Can you please give me more details? Or send me a sample? Do you keep a separate section for cheques, separate section for credit card expenses, separate section for cash? Or do you simply do a day by day entry, May 1st to 21st, no matter what form of payment? I need to keep books for my husband’s self-employment, but at the moment am still using 16 column paper ledger. Thks.
May 21, 2008 at 1:48 pm
I agree totaly, I bundle my communications and every year I go over the bill with a fine toothed comb, then compare it to current online prices. If they are offering your service for less I phone them up and get it for that price.
I don’t think people realized that these companies inch your bill up bit by bit all the time.
I wish I could say the same for one of my family members, her bundled communications is $350 a month! It gives me heart falure but she doesn’t seem to have a problem working for almost a week every month just to pay for it! Yickes
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May 21, 2008 at 2:39 pm
Mary – it’s very simple.
Open a new excel sheet document. Write the year at the top.
Draw a grid – rows and columns – in the first row, {going horizontal} each box has one item – start with Expenses or Bills, next box, Jan, next box, Feb and so on, so each month will have its own box. Last box – Total.
Now the very first Column {going vertical}, under Expenses or Bills, write all your bills/expenses, one per box. Once you have all that in – at the end have 6 boxes that say – Cheque 1, Cheque 2, etc, until Cheque 6 or how ever many you use or any other expenses you may have.
Last box in this first column – Total.
Again 6 or how ever many cheques you use – say Note 1, Note 2 and so on – this is where you write what you wrote the cheques out for.
So each month, as soon as you have paid a bill – write the amount under that month in the box that corressponds to that bill, write 1st cheque of the month – write the amount under that month by the Cheque 1 line and so on.
At the end of the month, simply add up all the numbers and you will know what has gone out. I only take out one sum in cash per month – $60 – and that also goes next to the Cash under the month I took it out. As I go along the month, and pay bills etc, I fill out the excel sheet right away.
Mary, I’m happy to send you the sheet if this does not make sense – please send e-mail address.
Gosh I’m sorry, I don’t know if this would work for your husband’s self-employment, but try it, because you can customize it the way you like, if you like it day to day, customize it that way, you just have to figure out what kind of chart will work for you.
Just to give you an example, my Expenses Column has this under it – Mortgage, House Insurance, Car Insurance, Life Insurance-husband, RESP, Telephone, Hydro, Gas, Cable, Visa, Amex, Cash, Savings, Water Heater rental, Cheques 1 to 6 {each has their own box}, Gifts, etc etc Then Total, then Notes 1 to 6 {each has their own box}.
Hope this helps Mary. Otherwise just send your email and will send you this excel sheet. Thanks.
May 21, 2008 at 2:58 pm
I completely agree. I look at EVERYTHING and have caught errors that would have left me the sucker if I didn’t catch them.
May 21, 2008 at 5:13 pm
I love excel. I took at course in the program a learnt a how lot I didn’t know about this program. Which is a good investment.
If you have excel here is a link for templates for budgets and expenses: http://office.microsoft.com/en-us/templates/CT101172321033.aspx
For those who don’t have MS Office, their is a free Office program online that you can get, it’s like MS Office, but not as fussy: Open Office at openoffice.org
For the person doing books for your husband, apparently Simply Accounting and Quick Books are good programs for that, I’m from the AccPac generation. I found it easy to use, but no one uses it in the business environment anymore.
May 21, 2008 at 6:31 pm
Mary, I also keep my expenses on an excel sheet, too. But I guess I do it differently compared to NKM.
I start a new sheet every month. On the first of every month, I will check my balance of all my loans and saving accounts, and record the findings on my sheet.
I divide my expenses into 5 groups: fixed expenses, saving and loan repayment, groceries, eat-out, and discreationary items. After an expense has been made, I note down the item under one of those groups. And I have excel adding up all the numbers under each group.
With those numbers, I create a nice pie chat.
So I think my sheet is not as complicated as NKM’s.
I don’t think there’s a right or wrong way in doing it. So, Mary, just give it a shot!
May 21, 2008 at 6:59 pm
Hi Gail!
I have a question regarding the sneaky ways of billing: Often when I add a service, they will bill me for that service for an extra month, for example Shaw likes to add on an extra month’s fee to the first bill that the service is on. So you’re always paying a month ahead.
But then, when it comes time to disconnect that service, they’re not refunding any money!
Does this actually make sense somehow and I’m missing the point, or are all these companies basking in my ignorance?
Inquiring minds want to know
May 21, 2008 at 7:11 pm
Timely Post! I was at my Credit Union today (the one that brought you speaking on Vancouver Island!) and asked questions about my bank fees. They aren’t outrageous, but I wanted to know if there was anything better. Good news! By keeping a $1000 balance I can have a fees-waived account! Woohoo that is $10/ month savings right there. Then we talked about the high interest savings account they just started to offer. I switched my kids savings accounts to that, and cashed out a really wimpy GIC into a High-Interest account for me, also no-fee! Now if I can contributre to that regularly, my emergency fund will grow faster.
It drives me crazy the “access fees” and other nonesense that are household bills are padded with! Even if we literally turn our gas off, we still have to pay the gas company! OUTRAGEOUS! My “no frills” phone bill has a big list of extras that get me a little hot under the collar…. the cost of having a landline I suppose.
May 21, 2008 at 11:50 pm
I use an excel spreadsheet as well for each month.
The columns are Date, Particulars, Debit (expenses Actual), Commitment (bills to be paid), Credit (Money coming in) and Declining Balance. I am a little obsessive as I check it every day against my bank balance and as bills are paid from the bank, I transfer the money from Committed to Debit (Actual Expenses). Since most of my bills are the same each month, I just copy and paste a template into the next month. It isn’t perfect but it works for me and I know how much money I absolutely need to have in the account to cover my bills as I can see the declining balance if I make a purchase that isn’t under the monthly bills.
May 22, 2008 at 6:46 am
I too use an Excel spreadsheet. It’s interesting to read everyone else’s usage as well, since we all have differing ways to record our info, yet it works for each of us.
I have monthly tabs within one main spreadsheet for the year, and on each tab is the following (horizontally):
~ “Where” (purchased)
~ Date posted
~ How paid? (cheque #__/PAP [pre-authorized payment]/Credit card [stating which one]/cash/Internet Banking)
~ Amount Paid
Then I have the following subcategories that I will copy the amount paid into (this is how I determine the full amounts I spend for each category per month):
~ Entertainment (includes any meals out, any snacks purchased out, etc)
~ Shopping (this is for when I buy myself clothes or other things)
~ Toiletries (I don’t often use this one individually)
~ Bills (payments to my RRSP and savings are included here as well)
~ Food (this is grocery store stuff. No meals out can be included here)
~ Medical (if I need pills, bandages, etc)
~ Transportation (my metropass is a bill, but if I buy other tickets/take a taxi, the expense gets listed here)
~ Miscellaneous (this is where gifts purchased go to, or if the purchase doesn’t fit one of my other categories
All of these are then followed with the ever important:
~Total (this tallies up all of my expenses)
~ Description (in here, I account for my purchases, writing down the items I buy. This helps remind me that there is a lot of stuff that I don’t need, even if I want it, and it helps me know what the money was spent on)
A hint for those of you who may decide to start using an excel spreadsheet:
When setting up your columns, only enter an amount once. Don’t re-enter it, use the settings to help you out. In each cell, type ‘=’ then select the previous cell amount you want in there.
To complete functions where you add the amounts in the cell, type ‘=D5+E7′ (or whatever cells you click on). Once you spend some time setting it up, it’s easy to track.
Like NKM, if someone wants an example page, I’d be more than happy to help.
May 22, 2008 at 9:03 am
You all are the most fantastic people!
Mary – Absolutely right, there is no right or wrong way of doing the excel sheet – sit down with a piece of paper and pencil and draw out a rough chart that will work for you, then go in and create your own personalized excel sheet – my sheet has changed over the years, as more expenses came in or stopped, so the sheet evolved.
It takes a bit of time in the beginning, but you will be so much happier once it is done, because it makes your life easier and everything is getting tracked and there are no surprises, because you can always refer to the previous month or year to see what expenses are coming up when, eg every Dec, my husband has to renew his driving license, which is one payment a year, so no surprises, look at the past year excel sheet, make a note on the present year excel sheet, start saving for the license payment each month, come December, you are all set.
Let us know how you are doing Mary and if you want our sheets – I’m sure we will all be happy to send them your way.
Thanks a million.
May 22, 2008 at 2:08 pm
Gail, I realize this is probably not the most appropriate spot for this line of chat, but I ask your indulgence:
Thank you so much to everyone for their super ideas. I have decided to simply take the present categories/columns I have in my ledger book and enter them into Excel – these would be: Month/Year across the top; next line Cash Disbursements heading, then next line horizontally it would read: Date; Information (who it’s payable to); Cash (was it cash or credit card); invoice no. (I assign every reciept a number – January is JA1, JA2, etc.); amount; bank charges/interest; auto gas; auto repair; auto parking; auto insurance; office supplies; advertising and promotions; gas; water; hydro; telephone (includes cell phones and internet); cable tv; printing/photos; computers/software; books/publications; magazines; miscellaneous (includes landscaping; expenses shared by both personal house and my husband’s home office; professional fees; medical/dental; charitable donations; property tax; professional dues; professional insurance; school tuition; courses; ETR expense; house insurance). I’m also thinking that I no longer need a miscellaneous column because on Excel I can have as many columns as I want. I probably should put car expenses on a separate sheet, house expenses on a separate sheet; a separate sheet for his income, and a separate sheet for income tax and gst paid. Any other suggestions? Anything I may have missed for a home office/self-employed person? My husband also works full-time at another job, so income tax for that income is deducted there already. Both of us also have medical/dental coverage with our employers, so our family is pretty much covered in that area (except for alternative meds/therapies I look to for my ongoing post-breast cancer treatment).
Then I need to start keeping “jars” for our family expenses – namely groceries and kids’ tuition/living expenses. Because I like to use our one credit card (free grocery points and easy to keep track) and debit card, I will have to have electronic jars, I think. All three of mine head off to university this fall – daughter heads up north to Nipissing for teacher’s college (renting an apartment and cooking on her own), middle son to York University (he’ll stay at home), and youngest son off to Ottawa for fashion design (living in an apartment and cooking on his own – ha!). All three are on the hook for half of the tuition fees. Yikes! May the good Lord help us all!
If anyone has any other ideas/tips/suggestions for either the business part of our expense tracking or how to save/put aside/keep track of the kids’ education/living expenses, I’m all ears!
I think the hardest part will be learning to navigate Excel since I do not use it regularly, and trying not to listen to the “silence” around me as the house slowly empties! Thank you!
May 22, 2008 at 2:39 pm
Mary, wow, you are incredible! Sounds like you are doing just great!
I would keep the business and personal expenses on separate sheets. Remember to keep all receipts and bills for the business for each month in folders – just so, if the tax man comes to you, you have proof of expenses and what you earned too.
I don’t use actual jars – I have a note book that I carry with me to the store – each page is a jar – so right at the top – in BOLD writting, write your heading and how much you are allowed for that week. We get paid monthly, so everything is calculated monthly, then divided by 4 weeks.
I use one credit card, because, I am afraid to carry cash and plus the card gives me money back at the end of the year – each time I buy something, I write it under the right ‘jar page’ and subtract to see how much money is left in that ‘jar page’. The only money I carry is $15 a week for fresh vegis from our local market.
I keep all the receipts and when I get the statement, I pay it off in full. Each week gets a fresh set of ‘jar pages’.
I hope this helps Mary – once you get the hang of Excel, you will be whizzing through it, it’s easy, just takes a bit of time to get use to it.
Mary, I’m sorry to hear about your breast cancer – my thoughts and prayers are with you. Your children sound wonderful – I’m sure they will be fine. Take this time to do something for yourself, something you had always wanted to do. Don’t look at it as a negative, think of it as time for you and your partner to once more focus on yourselves. In 2 years, I’ll be sending my child off too – have started a list of things, I always wanted to do! It’s going to be quiet around here for sure.
Hope this helps, thanks.
May 22, 2008 at 3:38 pm
It’s all good now, NKM. Losing a boob and going through chemo and radiation is not as big a deal as not being around for my kids and the rest of my extended family, so I am truly grateful for that.
I’ll scout about for a notebook, and keep it with me for jotting. We were audited two months after my daughter was born (23 years ago), and while that lovely young man’s presence in my dining room for seven solid days was rather taxing, he very kindly set us up with the paper ledger. It has worked till now, but the computer’s so much more accurate, especially when the bills reach such ghastly numbers!
Thanks again for all your help. Cheers, Mary from Toronto (Kipling/Bloor) – and I’ll catch you on the next blog!
May 22, 2008 at 7:29 pm
Mary:
Remember to have your kids apply for all bursaries that their schools offer. Having just graduated from York myself, I can confirm that York does offer many bursaries for students.
Even if it is not required, your kids should at least apply for OSAP – with all three at school, it should be easier for them to get OSAP, and this increases their likelihood of receiving bursaries and work/study and service-bursary positions at school.
While at York, I had a service-bursary job, which allowed me to work 125 hours over the year, and gave me a stipend of $2000 for the work; this might be an option to help your son cover his half of tuition. Don’t forget that books also add up to a hefty amount!
Some tips I have for books:
- Hold off on purchasing the books until necessary. Yes, the lineups will be long at the bookstore if you wait, but once you have the reading list, you’ll then be able to track down some of those books used
- Even better option: check which of the books are available at the library. Most people don’t think about that – in my final year, I paid under $250 for my book purchases (mostly course kits which I couldn’t obtain from the library/books for what I deemed my “important” classes or that I’d read again), and under $20 in late fees for the books I had to hold onto while writing essays. (I was looking at around $1500 for my books).
If you want more information/tips that your kids might be interested in, I’d be happy to chat with you via email.