What Eats Your Savings?
Posted by Gail | Filed under Saving
We all have things we do routinely to which we never give a second thought. It’s the magazine we pick up at that check-out counter, the cup of coffee we grab on the way to work, the candy bar we buy every afternoon as a quick pick-me-up. Whether you’re shopping with the kids and letting them pile stuff in your grocery cart to keep ‘em quiet, or hitting up the bookstore for something to read on a quiet Saturday afternoon, you might be spending money you could be saving.
For the next month, try this experiment to become conscious about how you’re spending your money. It doesn’t matter if even if as you read this you say, “Yuck!” or “How anal!” do it. Keep track of every cent you spend and what you spend it on. At the end of each week, add up what you’re spending and see if you can spot Spending Mice that are nibbling away at your Savings Cheese. Then look for ways to plug the holes in your unconscious spending. You might:
Allocate a specific amount of cash (less than what you’re currently spending) to your Small Indulgences category. When the cash runs out, you can’t buy anything. Save the rest.
Substitute other sources, like the library for the bookstore or a homemade lunch for the food court or local restaurant.
Leave your credit and debit cards at home if the temptation to spend is so overwhelming you can’t get it under control. Walking around with just a $20 bill in your wallet to see you through the day is a great way to feel less pressure to spend. (Make sure you have a full tank of gas!)
Becoming conscious of where you’re money is going is step one in coming up with a real plan for saving for the future. Whether that future is school money for the kids, emergency money to cover your butt or retirement money so you’re not old and BROKE, knowing where you’re money is going now is key.
May 29, 2012 at 6:52 am
My spending mice: magazines at the grocery check-out; snacks from the cafeteria at work when I’m lazy to pack a full lunch; my husband at Costco.
I am trying to fix the magazine one (they add up fast and just lead to piles of magazine clutter around the house!) by subscribing to the one magazine I just love (this way it’s budgetted) and then allowing myself 1 other magazine from a newsstand if I think it’s worthy. This way I can splurge when I want and it’s made me think about how much I’m willing to spend at the newsstand. That money comes from my bi-weekly mad money. Maybe not a perfect system but it got me thinking about how that $5 for each magazine really adds up and eats a chunk out of my money.
I am normally good at packing meals the night before. Both my husband and I commute together to work and at a crazy early hour in the morning so we are both eating breakfast and lunch at work. Some mornings though I just want something different or more and then I find myself in the cafeteria downstairs. Or at Starbuck’s across the street. Usually after a day or two of this and I see how depleted my mad money in my wallet is, that curbs the craving. At least for that week. I do plan on Friday coffee break with coworkers at Starbuck’s. It’s a treat and it’s planned which means it’s budgetted.
Now, as for my husband and Costco, *sigh*. We go in with a list (groceries, household items, personal care, etc) but they have all sorts of things they showcase from time to time, or cool things for the house and those food vendors don’t help in any way! Before we hit the checkout though, we review the items in the list, really make sure it was on the list or it’s such a sale item it makes sense to stock and we have to be able to afford it at the checkout! He just loves the store and sometimes it’s easier to say yes and keep him quiet! LOL. But he’s on board with what we can and cannot afford so it’s not a huge stressor to the budget.
May 29, 2012 at 6:56 am
@ AndreaM: love the idea of looking through your groceries at the checkout line! That would likely really help those impulse buys! My husband is terrible for things like that. I need to take over the shopping if I hope to cut back, but with him being off one day during the work week, it’s really convenient for him to do it, so I guess I shouldn’t complain!
May 29, 2012 at 7:29 am
Mine is the morning coffee. I’ve made it at home but it’s not the same. Also lunches out, because I’m working two jobs so I’m gone from 6:30am-8:30pm and when I tried just making extras at dinner, I would just eat those extras rather than refrigerating them for the next day! I’m coping by using a Coffeeshop gift card and not getting more when it’s spent out, and by keeping snacks in my office drawer. It’s definitely hard though because that coffee saves My life each morning. What I actually need is a vacation where I can sleep all day for a week; then I won’t need coffee so bad!
May 29, 2012 at 7:40 am
I thought writing everything down was part of budgeting? No sense in making a budget if you’re not deducting what you spend from the allocated totals. And it’s not that big a pain once you get a working spreadsheet set up. We’ve been doing it for 3 months now (I discovered your show in March) and while the jars and the budget binder are not my thing, the spreadsheet is working great. (We don’t use the jars because we don’t have debt other than the mortgage so we’re good with using credit cards that we pay off every month)
May 29, 2012 at 7:53 am
I did this excersise years ago and it really is an eye opener. I did it for a month, I noticed my spending patterns. I cut some of them out immediately.
May 29, 2012 at 8:04 am
Mine is restaurant snacks! It is so easy to go ‘well, I don’t feel like packing a breakfast today and I can get a bagel sandwich for just $1.50′ or ‘I am a little hungry and won’t be home for an hour so I will just get a little something.’ If I did that three times a week, that’s almost $40 a month on just junk! I am really trying to be careful right now because my partner may have to leave his job, so I have become super-aware of this!
May 29, 2012 at 8:09 am
I am my own mouse. I (literally) eat my savings in restaurants.
May 29, 2012 at 9:08 am
I use Gail’s allowance rules for kids, and apply it to myself. I’m 41, so I get $41 per week for fun stuff, and it fits in the budget:)
May 29, 2012 at 9:17 am
My thing was books, books, books, until one day I audited 6 months worth of accounts. I was spending a stupid amount ($120) each month. I shifted to garage sales and goodwill for my books source. Still spent too much ($40) so finally woke up and smelled the coffee and hit the library! I still spend money on books, but about $1 a month. I Must start returning books on time!!
Starbucks is my indulgence. I have a re-loadable card and once or twice a week I will treat myself to a $2.50 coffee. Because the card is registered on-line, my not fancy, plain old coffee re-fill is free. That makes it $1.25 a coffee
They also send me coupons in the mail for Free Coffee any kind, any size, so That’s when I treat my daughters to the Supersize Mocha, Chocolata yaa yaa with whipped cream (usually about $5).
@Jessie, I make double food many nights and before we 4 sit down to dinner, I portion out for the next days lunches. Because its already out of the pot and in containers we are less likely to go for seconds and eat tomorrows lunch.
May 29, 2012 at 9:38 am
Signing up for running races….I want to do them all
May 29, 2012 at 9:43 am
Yarn. Yarn, yarn, yarn, and more yarn. And a daily coffee at work.
May 29, 2012 at 9:58 am
I tracked my spending for almost 2 months and found my most ridiculous purchases were at my work cafeteria (the money comes off your paycheque because you scan your purchase with your work ID–what a sucker I was!). Now, my partner and I make weekly meal plans, shop with a list, and make big batches of things like soups and chilli. It’s crazy how much money we have save (or shall I say, it’s crazy how much money we used to spend!).
For you coffee drinkers, Costco has Starbucks roasted coffee beans, 2 lbs for 12 or 14 bucks (somewhere around there). That’s the same price as one lb at Starbucks (actually less!).
May 29, 2012 at 10:11 am
I simply don’t allocate a lot of cash to spending. I keep my intended spending low, have a scheduled RRSP weekly savings amount, and aim to save an additional 30% of my income. On months where I’m not seeing friends too often, or don’t have to replace worn out clothes, or don’t go out much, then I meet my goals.
Lately however, I’ve been driving to my parents at least once a month, which bites into my intended savings (that’s $30 in gas each trip), my clothes have been wearing out or don’t fit any longer (I replace a pair of pants at a time and wear them to their death). I’ve also been getting together with a friend once every week or two – although we keep our dates “cheap”, it’s still $10 to $20 dollars when we spend a night out or catch up for a quick lunch date.
My $150 for monthly spending only works some months, but I always aim to keep my budget around there (that money covers everything in the jars except for groceries, cable, phone and Internt: gifts, meals out, dates with friends, dates with fiance, snacks at work, gas [I tend to rely on TTC, but we do drive to see family], replacing items at home when they break, etc).
I find that on months when I’m not replacing clothing or buying gifts, most of my spending goes to food (often for things I crave but don’t keep at home so I don’t overindulge. It’s a deterrant to have to spend $8 on two gelatos when I could have spent half that on ice cream!)
May 29, 2012 at 10:33 am
I’ve decided to forego satellite TV ($90!)for 6 weeks. We live in the boonies and don’t have super-high speed internet or access to airwave TV. But since I’ve made this commitment I notice just how much garbage is available for us to watch. I personally don’t watch much; I used the TV for satellite music. But that will be over this Saturday. My husband and son aren’t thrilled with our trial-fast but I believe it will help wean us from a stupid time&money-waster. We certainly have better ways to use our resources.
May 29, 2012 at 11:02 am
cable TV = biggest waste of money ever. We’ve been without for years now, and life is much more enjoyable without it. When I had it, I felt obligated to watch tons of TV to get my “money’s worth”–but now I’m so much more active.
And saving a LOT of money each month.
May 29, 2012 at 11:22 am
@Karen M: That is such an awesome idea! I’m totally in for the “adult allowance” on indulgences!
May 29, 2012 at 11:27 am
@AndreaM – Just a tip – most magazines have the same content (or very similar) on their websites. I used to buy magazines for fitness, food, and craft ideas, then I just started using their websites. There’s still lots of great content, and it doesn’t clutter my apartment or cost anything to use
I also love pinterest for searching ideas on these topics.
May 29, 2012 at 11:42 am
I have to say, we don’t budget day to day. We use 3 accounts – Planned Spending is for large occasional expenses and receives a set amount every month, fixed expenses is for every set amount and reoccuring expense, and Gas and Groceries. Our paycheques go into Fixed Expenses and get allocated to our emergency fund, other savings, mortgage etc. We have a weekly automatic transfer to gas and groceries. We can empty that account every week on whatever we want to buy, be it coffee or groceries, or a date night. Our spending needs are met automatically, so we don’t worry about the small change. We follow a variation of the 50-30-20 method (2 kids in childcare blows the 50% needs away).
May 29, 2012 at 12:48 pm
I’m on a fixed income so I need to watch every penny, but I do like to indulge too. I’m not a coffee drinker but I do like to treat myself to either a dinner out to the local Chinese Restaurant or to a dessert out at the local Diary Queen. This is my once a month treat, but that is only if I can make some extra cash selling scrap metal. I have friends and neighbors help me by giving me all their cans etc. I don’t make a lot but an extra $40-50 adds up, which in turn means I can save more.
May 29, 2012 at 1:07 pm
@Sylvia: I’m embarrassed to admit that that approach does not stop me. I’m a stress-eater, and food around means food eaten, portioned and cold or no. I’m currently dealing with it by getting up 20 minutes earlier to make it each morning as it’s that or overeat even more than I do now! I actually used to use the shame approach: I told my husband that I made tomorrow’s lunch thinking I’d be too embarrassed to eat more, but then I realized that it didn’t stop me anyway and I need less shame re: food, not more!
Another thing I do is, when buying lunch out, I buy from the grocery store rather than a restaurant-let’s me grab some groceries at the same time and is a cheaper price.
May 29, 2012 at 1:54 pm
I confess, I’ve been tracking everything since 2005. It started with a layoff and not having a clear understanding of how long we could survive with one salary and one on EI benefits. We quickly created the early edition of the spreadsheet we still use to this day. We plugged in what we knew, scrounged for any receipts still in the house for groceries, went back through a few months of bank statements and pieced together a fairly good representation of what we’d been spending. Boy was that an eye opener. We immediately cut the non essentials and cut back on the flexible things (groceries). We decided to properly track the real amounts going forward to see if we’d missed much in our panicked creation of the spreadsheet. We had missed a few things, and certainly hadn’t included the quarterly/annual items that come up. Once we started tracking regularly, it became a bit of a game. How lean could we go without feeling like we were suffering? Once the blinders were off on our true spending, we could see how easy it would be to cut out the crap and instead put that money toward all the things we’d always thought we couldn’t afford. The job situation resolved itself quickly and was a non event, but it forever changed our financial lives for the better. Now, I go a little nuts when I haven’t updated the spreadsheet for a few days and feel like I’m getting out of touch with exactly where we’re at. Turns out that rather than spending the found savings on stuff, we’ve reprioritized and all the savings go to our RRSPs and wacking down the mortgage with extra payments. Normally all the excess is skimmed off the account every week and redirected. We are focussed on early retirement and with very few exceptions every extra cent goes to making that happen (no mortgage and sufficient savings).
As for the things that sidetrack our savings. There is normally only one – travel. It’s our one splurge in an otherwise very frugal lifestyle. I don’t budget for mad money, entertainment or even clothing. Those things happen so seldom we just get what is absolutely necessary at the best price and move slightly less to savings that week. As I type this the newest item of clothing I’m wearing is at least 3yrs old, my haircut is the $15 First Choice variety, but I’m also trying to work out our summer vacation – Istanbul or Paris? Yup, it’s a weird balance, but it works for us. (FYI – flying free every summer because you run EVERYTHING through the credit card is beyond fabulous).
May 29, 2012 at 2:07 pm
We have a generic ‘grocery’ category which includes food plus any toiletries, cleaning supplies etc. Years ago I kept track of exactly how much we spent on specific items. It really opened our eyes to realize how much money we did spend on chocolate bars (I would grab one at the check-out whenever I was out and that could be many times in a week! sometimes more than one in a day!). We always realized how much milk we spend in a week where we buy chocolate sauce (a normal week has us going through 6L of milk… if we have Nesquik in the house, just one bottle, we easy go through 14L!!! So that $3 bottle of chocolate sauce means more than doubling our milk costs in a week!).
May 29, 2012 at 2:47 pm
Kids,kids, kids ,did I mention my children. I am always trying to make their lives easier because they are so great. They don’t ask. I just give. But I am going to stop. My husband says it is time for us. I read an article in the paper this weekend that baby boomers feel they have to help their children live a certain standard of life. I think its true. Even though I don’t want to believe it.
May 29, 2012 at 3:39 pm
@Tara – that is so true – there is a domino spending effect to some purchases!
May 29, 2012 at 8:41 pm
@Jessie, don’t be embarrassed. Maybe you’re food is more appealing than mine
Try chewing gum while your packing everything away and Don’t let yourself take the gum out. There is nothing more disgusting than bits of rice or meat or whatever stuck in your gum while you’re chewing it.
I hear you about the stress eating. It’s a tough one. What if you gave yourself Bonus Bucks at the end of each week, for every lunch you made yourself and actually ate at lunch (not before). Those bucks, say $2 a meal go into the “Jessie needs a spa” fund. Once you’ve accumulated enough , say $100 go to a lovely spa and Relaxxxxxxxx.
I know that we should be saving, but I know that Gail would agree that If Mama’s not happy, Nobody’s Happy.
@Peggy, I think my kids are the Cats Pajamas too, but I have also realised through scrimping and saving and trying to teach them about budgeting, that when they Earn the money themselves to buy something, they actually Like the item more. Its a true accomplishment for them. They are teens now, but buying something themselves is right up there with the “I dressed myself” button we pinned on their chests when they were in grade 1 and chose their own weird and wonderful outfit.
Personal Pride.
May 29, 2012 at 10:42 pm
Right now, WORK is eating my savings. I am struggling to maintain my 20 hours/week to keep on budget. (This week it’s less then half!) Compared to last year, I am a few hundred hours behind at this point. Add to that a boss who won’t be straight with me, it’s very frustrating. On a positive note though, all the hard work the past few years to pay off our debt has really come in handy the last few months. At this point, my income/job is questionable come summer. What I am making won’t support childcare and our household… I will actually be in the hole. So we have been saving my income and living off hubby’s bi-monthly check.
It’s all about planning. I can have the same $20 in my wallet most the week, if I plan. When I work, bring snacks/lunch/beverages. (Accept my daily Timmies). Out and about with the kids, pack a cooler for drinks/snacks. As long as I plan and think ahead, we don’t spend. We still manage to treat the kids occasionally, but mostly I look for ice cream treats on sale at the grocery store.
I find it’s all about planning. Twice a month, hubbies cheque is deposited. 1 & 15. I pay XXX bills each time. I pay down the little tiny amount of debt we have left (would be gone if work wasn’t such an issue dang it!) Next I pay US. Savings, emergency fund, kids planned savings. Then we withdrawl our budget until the next pay for our “jars” (Not really jars, I can’t handle the money being out like that). A small amount is left in the chequing account “just in case” and we are good. We still get “baby bonus” which is also added to kids savings minus what I need to use for the kids. We’ve been living off hubby’s income since March and I am quite excited that if I need to I can be done with the garbage at work and enjoy the summer with my kids. Only problem is finding a new job in the fall.
May 30, 2012 at 5:34 am
Leaving your bank and credit cards at home is a great idea to cut back on frivolous spending. Just have to remind ourselves to save what we need, and then spend what we want ^_^
May 30, 2012 at 12:56 pm
I don’t worry too much about it. I pay myself first with auto transfers each payday for long term savings, emergency fund, household repair & property tax fund, vacation fund. Then I pay all household bills and try to keep to budget on groceries, gas, fun. Anything left over goes into extra savings, or that little mad something. I set fairly lofty savings goals and as long as I meet them, I don’t really worry too much about the rest.
But COSTCO can drain the wallet.
May 30, 2012 at 3:24 pm
Costco is a nightmare! Waaay too many temptations. We had a membership for one year and then gabe it up. I don’t think we ever got out of there having spent less than $150 no matter how little we had on the list. I swear you could go in there for milk and come out with a BBQ!
May 30, 2012 at 5:00 pm
Definitely kids’ activities, though they do buy their own clothes etc. For me at Costco the secret to not spending so much is to NOT push a cart when i am planning on purchasing only a few items!!
May 30, 2012 at 5:23 pm
Ah Yes, Costco….that particular merchandiser should provide us with a support group of some kind; it’s WAY too addictive
.
I have always been less of a weekly “tidbit spender” than my husband, whom I used to generally blame for everything related to the negative state of our finances. I say used to because after we sat down and took a true, honest look at where the money was going, I needed to rethink my judgement! It is true that his day to day spending far exceeded mine (he is a smoker – ugh – and used to drink a lot of soda, which has since stopped – yay!) however when I added up all the extras I was purchasing during my “grocery shopping” trips to Costco or the dinners/coffees out with friends throughout the month, combined with the quick lunches I would grab when I neglected to make my own, I was horrified to see that I was actually spending easily as much as he was! After the initial shock, we did some major reworking of our plan and now we both have a very small amount of cash each week to spend, and I always make sure when I make lunches that I make them for both of us. Sounds like a very small thing, but it’s astounding how much money we have saved!
May 31, 2012 at 7:18 am
Horses are the biggest expense, started with one, then had to buy all the stuff that accompanied that particular hobby. Big truck, trailer, then a country property, fencing, new barn and a couple more horses, would love an arena, but that would not be a great investment at 100,000!
I guess it’s more of a lifestyle choice and we’ve never been happier. Farmland on the Niagara escarpment an hour and 15 mins north of Toronto is always going to be a great investment.
June 1, 2012 at 12:05 pm
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June 2, 2012 at 8:22 am
Magazines are a waste of money!! I don’t take the kids grocery shopping, I shop at No Frills-no temptation and we only buy toilet paper and coffee at Costco(unless we need something else-great prices). You have to have self discipline at Costco.
I also cook mostly from scratch. So much cheaper!!! Thanks to my growing up in Trinidad, I am not afraid of cutting up a whole chicken!! Lol.
Gail, you are so smart, thank you for sharing!!
July 25, 2012 at 11:32 am
I always leave my credit card at home everytime I would go to the mall. I just bring it if I need to buy something expensive. I used to be a compulsive buyer and I used to pay a huge amount of money on my cards…I am wiser now and more careful…