Where did all the money go?
That is pretty much the question I ask myself on the last day of every month when I finish entering any last transactions into our family budget. I am endlessly surprised at just how much money we spend and how much it costs to live in New Zealand. We might be a beautiful country full of interesting people but CHEAP we certainly are not!In a single month we spend anywhere between $4,000 - $5,000 which always feels VERY HIGH to me. But then I look down my budget and there I see the facts of the matter:
- Insurance - $540
- Food - $1,050
- Medical - $270
- Books - $60
- Rates - $250
- Winter heating - $240
And on and on it goes….
Like sand through an hourglass, all this money flowing out of my bank account and apart from the books (which are for my daughter) they are all really boring expenses!
And just when I think we might have a really LOW month, the car goes in for a service:
Ka-ching - another $430 has vanished!
And then we do it all again the next month!
On the other side of my budget is my SAVING tab and every dollar that gets spent above is another dollar that does NOT go into my savings. My savings and investments are my escape plan for less work and early retirement! So you could understand I might want these figures working in my favour a bit better?
Lifestyle creep happens to even the best budgeter (and also to the ‘average budgeter’ like myself) so once in awhile I do a “SPENDING RESET” where I/WE have a pretty intense month of tracking every dollar and getting our monthly spending down to the BARE BONES. So, with the help of another finance blogger July is going to be a SUPER FRUGAL month in our household.
My Mum hates the word ‘frugal’ because to her it represents the endless pots of soup she made to feed our family of seven as we were growing up. Money was always tight, Mum was always looking to stretch a kilo of mince to make a nutritious meal, we were forever ‘going without’ and she got mighty sick of it I can tell you. To me ‘frugal’ means putting each dollar we make to good work so that it can provide us freedom down the track, I’m not doing it out of necessity, for me it’s a choice. And to me, thankfully, it never feels like deprivation. I decided very early on in life that I was not going to struggle with money, I would control IT and not the other way round.
So, for the month of July we are going to spend extremely carefully on absolutely everything….. EXCEPT heating. I’m willing to cut back on a lot but being warm and healthy is not a compromise I’m willing to make. Winter in Central Otago can get mighty cold.
The following things are up definitely up for review:
- No eating out - NONE. I will be meal planning and shopping (with a list) just once a week
- No wine or alcohol - That stuff is pricey. Delicious yes, but ultimately unnecessary
- Walking to work - I have no car at the moment anyway because I have lent mine to a friend while her car is getting repaired so this is easy!
- Leaving the credit card/cash card at home - If you go out with no access to money it makes spending pretty difficult
- Coffee at work - I’ll take a nice plunger coffee in a thermos from home instead
- No birthday gifts - Or I’ll give home made gifts, or cook a dinner, or bake a cake….did they even want a gift anyway?
- Online subscriptions - Time to review and cull
- If during the month I think I have found a MUST HAVE - I will WAIT, I’ll do nothing for a couple of days and if I then think this expense is REALLY necessary then I will work out a way to get it cheaply. For example our microwave broke last week after 18 years of steady service. It cost me $12 to replace it. How? I rang around my whanau and my Mum had one sitting in her shed. When she moved into her house it was in the kitchen but she never used it so put it away in the shed. A bit of a clean up and it was good to go. And the $12 you ask? Well, that was the cost to recycle my broken one at the recycling centre. My conscious would not let me throw it in landfill.
- Treat myself in a different way - Yoga for free on youtube. The zenned out vibe you get is far better than anything you can buy in a store
- Stop the “fritter factor” - I’m a shocker at $3 spent here (a single artisan chocolate to treat my daughter after a great week at school) and $6 spent there (at the Salvation Army on a merino top that I really didn’t need). But it all adds up over the course of a month. It may feel like I am missing out at the time but I guarantee that one week later I won’t even recall that item that I desperately wanted to buy.
And as the month progresses I’ll be tracking all of my spending in our budget because after all, how else can I work out what I have saved?
It is EASY to make a spending decision in a frugal month because the answer to “should I buy that” is always a resounding
While I am cutting back during the month I will also be looking for ways to ramp up my earning. Can I pick up hours at work, kick off a side hustle I have been thinking about, sell some stuff online, rent out the spare room...My mind will be working overtime to come up with new income.
You might have read this and thought “Oh man how insanely BORING” to have to spend a whole month questioning every spending decision, but on the other hand you might read this and think “oh man, having to pay a mortgage for 10, 20 or 30 years, how insanely BORING, how can I kill this sucker off early?” The point of having a frugal month is to make you question every decision you are making and to ask yourself if you are utilising the money that comes in and out of your life well? We do a lot of spending out of habit and it’s time to break the cycle and reset your spending. I can guarantee you that if you focus hard on this for just one month you WILL free up cash that can be used to pay down your debt or move into investments. And doing one or both of these things is without a doubt going to provide you more opportunity going forward. I promise!
But so that you don’t just read this article and think, “yep good idea” but then get sidetracked and do something else, I invite you to follow this link where Liz from Frugalwoods has developed her Uber Frugal Month Challenge. This is what I use to encourage me, give me new ideas and keep me focussed. Sign up and give it a go for a month. What’s the worst that can happen? You save some money? I think it’s a risk worth taking don’t you?
The information contained in this article is of a general nature and should not be taken as advice. It reflects the opinions of the writer only and does not necessarily reflect the opinions of NZHL (New Zealand Home Loans).