Friday, December 4, 2015
Financial Friday: Keeping an Eye on the Bigger Picture
If you've been a follower for a long time, you *might* remember that I participated in a spending freeze in January of this year in order to try and curb our spending and be more mindful about saving. The spending freeze proved to be like a great big "reset" button for our money habits, which was great--up to that point, we had been gradually increasing our income without increasing our savings, which was something I'd always sworn I'd avoid once we started making more.
Although we've still been pretty good about not going crazy in our spending and trying to put money aside each month into savings, I knew we needed to step it up. After all, we don't want to be living in an apartment forever, and we need to be preparing for a few bigger expenses coming up sooner than later (probably a major car repair and a new laptop, to name two).
I didn't want to do another spending freeze, but I did want to make sure that we weren't overspending too much on frivolities, so I decided to track our spending (by hand) for both October and November. I've been roughly tracking general expenses through the categories found on Mint.com for years, but I'd never created an itemized list where I listed every single thing purchased over the course of a month.
Needless to say, it was pretty eye-opening.
For one, the mere fact of recording all our spending made me more mindful of it. Since I knew I'd have to write down everything, I tended to make much smarter decisions, especially at the grocery store. Due to that fact alone, I ended up saving almost $200 in groceries in October compared to what I'd spent the month before.
Once I was able to see where our money was going, I could start being more intentional about where I really wanted it to go. And one place where I wanted money to start going (which we'd never planned out before this point) was into a special bank account designated specifically for saving for a down payment on a house, so that's what you would have found Matt and me doing about a month ago one Saturday--going into the bank to designate a specific account for our future house.
It all of a sudden made us feel like "real" adults, even though buying a house is still years into the future. But to think that it was finally on our radar, and that we were finally going to start intentionally planning towards it--wow!
Having our future house in mind, I discovered, also helps to curb spending. With each purchase, I often think, "Is buying this now worth putting off buying a house?" Obviously, with some things, we need to keep spending money on them now (groceries, cell phone bills, utilities, etc.). But many other things that I often spend regularly on (books, movies, clothes) have not seemed nearly as tempting when I try and keep the bigger picture in mind. I've made myself read the books that I already have (literally hundreds of which I haven't yet read), check out books from the library when I feel like I "have to" read some new book or other, and organize my closet so that I only currently have in there what currently fits, which makes me feel almost as if I have a new wardrobe, since I no longer have to wonder every morning as to what I actually fit into.
As of now, we don't have much in our down payment account because we're also still trying to build our savings back up after having them cleared out earlier this year by hospital bills. But we're regularly putting aside a lot more now just by being more mindful than we have been at any other point, which brings me such a sense of security and satisfaction that I'm shocked it's taken me so long to do.
So, if you're looking for ways to save more money without feeling like you're depriving yourself too much, here's what worked for us:
1. Track your spending. Just as tracking calories is proven to help people eat less junk and eat fewer calories in general, tracking your spending will often curb impulse shopping and make it much more likely that you'll just spend money on necessities rather than wants. Write down everything--from the box of cereal you bought at the grocery store to the cup of hot cocoa you grabbed from 7-11--for an entire month, and pay attention to what you're spending in different categories (like "groceries" or "eating out" or "baby supplies").
2. Make it so that your paycheck is automatically deposited into your savings account, then simply transfer out what you'll need for the month into your checking. For some reason, this is much more effective than having your paycheck be put into checking and then saying you'll put some into savings--maybe it's seeing how much could be in your savings account if you left the whole thing? All I know is, ever since we started doing this with Matt's paycheck, we have wasted far less money and saved WAY more (like, a couple hundred dollars of month more, at least).
3. Before you make any nonessential purchase, ask yourself if this is worth putting off your dream for (like a future home). Often, you'll find that it isn't, and you'll put the item back. (Bonus: your house accumulates less clutter!)
For all you homeowners out there---how did you save for a down payment? I'd love to get some more strategies under my belt!