At nearly 38 years of age, I have never actually made and stuck to a budget. I’ve always followed more of an intuitive process and it’s always worked for me. I’ve never carried a balance on a credit card, and the only debt I’ve acquired was my gargantuan student loan from grad school (which I paid off in full back in 2012–hooray!!!!). No matter my job and its corresponding salary level, I’ve managed to consistently live within my means.
By my own choice, I am now without a job and salary. This will be temporary, of course, or at least that’s the plan, but it’s definitely required a more acute level of financial awareness. Over the last five months, I’ve found it fascinating to pay attention to where my money has historically gone and where it’s now going. I’ve watched my monthly variable spend decline by about 48% (!!!!). Was it always easy? No. I like my things and I like to get what I want when I want it. However, it’s also been incredibly rewarding to see how much can be achieved with fairly minimal effort.
In the process, I’ve recognized some key behaviours that are critical for my own budget awareness and financial management.
1. Have a rainy day fund: The only thing that is making my employment hiatus a possibility is that I focused quite intently on saving ever since I paid off my massive student loan. In reality, I could’ve saved twice as much had I managed my spending better, but I still accumulated a nice little rainy day fund that eases some of the financial pressure. Whatever amount you can save, make it happen. It will create so much more flexibility and breathing room for you, whether you are hit with an unexpected expense or you just want to make bigger changes in your life. I highly recommend the auto-transfer to savings so that you never know the money was there. Tricking your own brain is fun.
2. Meal planning: I know, this is a big yawn. Meal planning isn’t fun or sexy, but you may be amazed at how much you save. We have virtually eliminated our “we-have-nothing-in-the-fridge-so-I-guess-we’ll-eat-out” expenses. We’ve also wasted way less food. I will probably write a whole post on meal planning in the coming weeks because I’m so excited about the progress we’ve made in such a short time. The long and the short of it is, I went from daily trips to the grocery store to 1-2 trips per week. We eat better, we waste less food, and I estimate that we’re easily saving $50-60 per week in groceries and anywhere from $50-100 per week in dining out.
3. Cut the fat: I love to order books online, but I have a reading room full of books, some of which I’ve yet to read. I like to buy workout clothes and I’m certainly not immune to wandering through a mall just to kill time and boredom, purchasing things I don’t really need along the way, just to feel better. Frivolous spending feels like it should be the easiest thing to curtail, and yet it can sometimes be the most challenging because it’s often emotionally anchored. Particularly when I’m not working, and I have all the free time in the world, it’s hard not to default to old patterns. I find the ‘wait 24 hour’ rule is very helpful. More often than not, if I ask myself to wait 24 hours to see if I still think I ‘need’ something, I either forget entirely or I come back 24 hours later and realize it’s not something I need right now.
4. Take advantage of deals/points: This is an area of budget awareness for which my boyfriend deserves full credit. He accumulates points on a couple of cards, and very generously allows me to benefit from them. Just last weekend, for instance, we bought $180 worth of stuff (some of which was necessary, some of which was not) using nothing but points. It’s a nice way to treat yourself without actually costing anything. The trick is to find no-fee points cards, and to redeem points for big ticket items that you would be reluctant to buy with your own money.
5. Pay attention to the little things…they add up: It sounds so cliche, but really I’ve been amazed at how much of a difference it makes to pay attention the minutia: toll fees, parking fees, coffees out, buying snacks on the go, and waiting for splurge items to be on sale at the grocery store (so long full price Ben & Jerry’s…sigh). I’ve made a concentrated effort to book meetings downtown over 1-2 days per week to minimize driving time, parking costs and toll fees and it’s made a difference. I’ve also become the crazy person who circles blocks endlessly trying to score the highly-sought-after free 2 hour parking spots. When I have coffee meetings or need to kill time in coffee shops between meetings, I’ve downgraded to buying a short coffee instead of a tall latte or double espresso. I pack my own breakfast and lunches and eat them in cafes. I used to worry I’d look ridiculous, but now I don’t care. I’m saving anywhere from $10-25/day doing it.
6. Track, track, track: If you’ve never tracked your expenses, and I mean all of your expenses, it is such an eye opening experience. I know I am late to the game on this one, so it’s probably nothing new to many of you. I knew I had some areas in which spending was a free for all (particularly dining out, travel and groceries), but I didn’t know just how much it was costing me. Even though I feel things are in check now, I’m committed to continued tracking. I want to know what all my networking is costing me. I want to keep seeing how our meal planning is affecting our grocery costs. I want to see how much I should be saving when I start taking on work projects again. It’s sort of become, dare I say, fun!
Yes, I just said tracking expenses has become fun. I probably just lost half of you with that one. My challenge to anyone who hasn’t done this is to give it a whirl. You might be surprised at how interesting it is…and how much ‘extra’ money may end up in your pockets!