Getting A Real Savings Started
(Day 3: Before We Can Discuss How Much)
If you accepted the challenge to assess your spending for a thirty day period, you know whether you have money left over at the end of the month or whether you are overspending due to the use of credit cards. You also had a chance to look at your spending behaviors- what you spend money on and any patterns. It’s a powerful teacher.
Do this. List every category that you spent money on in your spreadsheet or on a sheet of paper. This is different than the former step when you listed every individual transaction. This time you are listing them by category. If you made 10 restaurant transactions that totaled $250, then list Restaurants $250. Do the same for tithes/giving, gas, mortgage/rent, life insurance, car insurance, gas and electric, water bill, cell phone, Netflix, PSN, subscriptions, etc. You probably have 15-30 things on your list.
Before we can determine how much to save, look over what you are spending money on. They can be divided into at least two categories (Bills and Incidentals). Bills are normally fixed expenses that cover your basic living (insurances, mortgage or rent, gas and electric bills, water bill, car payment, cell phone, etc.) Incidentals are bills that you have some flexibility in. Some are basic living expenses, but you can adjust the amount if needed. For example, if you see that you have been spending 300.00 on food and most of it is fast food, you have some flexibility in that. You can commit to grocery shop and cook fresh foods and cut your food bill by half or a third. See what other things you can reduce spending on, though you can eliminate the bill altogether (gas, giving, etc).
Then, there are bills that are optional (Netflix, Hulu, Gaming Apps, salon appointments, etc.). Those are not required for basic living. If you are overspending (operating in a deficit), you must get rid of these. You must free up some money. But even if you are operating with a surplus, you are still likely overspending. Get rid of as many of these types of incidentals that you can.
Re-write your list as “Bills” and “Incidentals”. Look at your Bills and ask yourself if everything listed are true bills? Is there anything on your list, you can live without? Maybe, initially you thought it was a bill or you thought it was a need. Then, determine if there is anything on that list that can be adjusted in amount, easily. We are not looking at refinancing and options like that- at least not right now. But maybe your cell phone plan can be reduced.
Now looks at your Incidentals. What things can be eliminated right away? What things are needs, but can be adjusted in amount? Go through your incidentals again. Did you overlook anything? Is there anything that you don’t want to get rid of, but if you’re honest, you can live without it- at least for a time. It doesn’t have to be forever.
Recalculate your new expense amount and compare it to your income. Hopefully, you feel a sense of pride at your new surplus. Do not despise small beginnings. If you are following this process through, you should be proud of your diligence. Now, it’s time to implement. Contact whomever you need to, and cancel subscriptions, adjust plans, etc. Go ahead and place a dollar amount next to each category of remaining items. You can use an Excel spreadsheet, a budget app, or notepad. Next time, we’ll talk about calculating how much to save. It may not be what you think it is.
