Start REALLY Saving Money

I was going to be doing a series on managing a home and business in one (WAHM-ing it!) but I changed my mind. I will put that on hold for a few months, as I just quit my job and need time to get myself organized in that area.

I will now be doing a Moneysaving series. This will include some very basic ways to save money, and some ways that are a little more work, but definitely worth the effort.

First and foremost, let’s clarify the definition of “save”. Webster states that this is: to put aside as a store or reserve: Accumulate. Maintain, Preserve. To make unnecessary.

I know that seems formal to include this definition, but I’ve read lots of books, blogs and articles that have very simple ways of “saving money” by skipping that Starbucks latte, or that candy bar at the gas station. They emphasize that you can do these things to save money, and not have to have a written budget. You can save without really thinking about it. While this may work for some people, I think for the general population, this is wrong.

Given that the word “save” literally means, “to make unnecessary” a budget is required, even if you save $5 by not purchasing your morning latte. Why? A few years ago my husband and I realized that we were spending $10 a day (combined) at the coffee shop below our apartment. We converted that to a yearly cost of $2,600 (when buying 5 days a week, which we did), and quit the coffee shop altogether. You want to know how much money we ended up saving? Zero! We didn’t have a budget, so when we stopped buying the coffee, we simply spent the money on something else. We didn’t make that money become “unnecessary”. None of our money was allocated to a certain category; it just sat in the checking account waiting to be spent. It didn’t sit for long J

I challenge you to write a budget. Without a written budget, when you “save” $5 on a latte, or $100 on eating out, you may simply up your spending somewhere else, because the money is still there to be spent. Look at your bank statements and see how much extra money you spent over the last 2 months. Look at the restaurants you’ve gone to, add up the small gas station purchases. Once you see how much extra money you could have every month, writing a budget becomes much easier. You will feel such a relief when you realize that in that budget, you can pay yourself! Not money for groceries, or gas, or clothes (I have envelopes for these also) but for a coffee when you feel like it, or a manicure! I haven’t decided what I want, so even though I’ve been paying myself every week, I have only spend $7 of it in the last month, and that was to take my son out to pizza.

My husband and I wrote our budget, stuck to it, and opened up a savings account at a different bank. All of the “extra” money goes into that account. It is a savings account, so it has no debit card. We cannot do impulse purchases with the intentions of quickly transferring money into our checking account (we’ve done this many times!).

Next week: Get your budget started