Groceries, food, restaurants, coffee and the like used to be where a good portion of John and I’s income went. In October, we added up our “miscellaneous” expenses – expecting them to be around $1500 or less – and we’re shocked (and disgusted) to discover we spent roughly $2,100. Thank goodness we made good money that month, but still, $2,100 is not a necessary amount of money to spend on food and household items!!
So for November (and all months moving forward), we decided to make some changes.
I’ll be completely honest, we never really budgeted before because we always were under the impression that we didn’t buy stuff we didn’t need or couldn’t afford. We would get paid, pay all of our current and upcoming bills, put money in savings and spend the rest on food, gas and other variable items. Seems like a good plan, right? Well, it’s fine if you’re not trying to save as much money as possible. But, we are. We want to put a large down payment on a house and retire early, so we needed to crack down on our spending and see exactly where all of our money was going.
Please note that if you are already following a strict budget, this post is probably not for you. This is for those of us “non-budgeters.”
How we slashed $900 per month in expenses
John and I have two checking accounts – our joint one and then one that I’m just on because I have some freelance income funneling into that account and haven’t switched it over yet. On October 31st, we got out our calculators and added up every dime that went out of our accounts that wasn’t a bill. The total was $2,094. This included gas, the local grocery store, Fresh Market (where we would buy cookies and coffee a few times a week – this really added up), Kirklands (I spent roughly $100 on fall decor), going out to eat, Costco, Target, Walmart and more.
Before adding up our expenses, we truly were under the impression that we were not excessively spending.
Wow, what a lie we were living!! Let me tell you first hand – little purchases add up into big ones. A coffee here and there, a few splurges at the grocery store (which happened to me every time I went), a random item at Target you “have to have” – it all adds up.
So I challenge you – right now – to sign into your bank account and add up all your variable expenses from last month (December). I know last month was Christmas, so go ahead and add up November’s variable expenses, too.
Are you shocked? I know we were. Here’s the plan we made moving forward (and stuck to):
Sign up with Mint.com. Any budgeting app or website will work just fine, but we chose Mint simply because we’ve heard great things about it and it combines ALL of your bills, bank accounts, investments and retirement accounts into one, big statement. It’s easy to read, it categorizes your expenses, it tells you your net worth and more. This was our first step in taking control of our spending.
Decide how much you want to spend for the month. For us – a family of 4 – we decided to strive to spend no more than $1200 on variable expenses. Again, this includes groceries, eating out, Costco runs, diapers, trips to Target/Walmart, gas, etc. On Mint, you can set this goal and break it down even further by setting goals on how much you want to spend specifically on groceries, eating out, gas, etc. We did this (set specific goals for each category), but our weekly goal is to spend around $250 on everything. If it’s a 4 week month, we’ll be under our goal of $1200, if it’s a 5 week month, we’ll be a tad bit higher.
Why $1200? We wanted to start low yet still be realistic. We may decide in the future to increase this number, but for now it’s working fine. We also wanted to do some “catching up” to even out our crazy spending the past few months.
Check in weekly. The one downside of Mint is it does take a day or two for your purchases to show up, but that’s OK. We check in with the site a minimum of once a week to make sure we are on track with our spending. Again, our goal is to stay right around $1200 for the month. If we eat out for $40 one night, that means we have less to spend on gas, groceries or other expenses that come up.
If you want to spend more, earn more. John and I have gotten a lot better about budgeting even though we work for ourselves and it can be tough. We’ve decided that if we want to buy something “extra” for the month, we need to figure out a way to bring in more money. We’re currently in the process of planning a trip to Charleston, SC, but nothing is going to be booked until we see exactly how our month is going to play out. And if we don’t earn more but still want to go, we’ll cut our weekly variable expenses by $50 and re-evaluate.
Keeping track of our spending each week has made such a difference in how we spend and save money. If the first of the month falls on a Monday, then our “week” is from Monday-Sunday. The last week of the month is always a little long, then we start fresh on the first on the following month.
In November, we met our goal and spent $1200 in miscellaneous expenses. That’s $900 SAVED just from tracking our expenses. And like I said, before adding them up, I would have told you that we were spending the absolute minimum each month. Do you tell yourself that lie, too??
So again, I challenge all of you “non-budgeters” out there to go spend 15 minutes or so adding up all of your variable expenses for the month. Even if you don’t plan on making any changes, it will give you a whole new awareness of where your money is going. You have literally nothing to lose, but a lot to gain.
photo credit: Flickr via pshegubj
brian @ Debt Discipline saysat
We saved all receipts for a month to help get a better handle on our spending. It was an eye opener.
That’s actually a great idea, too! I’ll have to suggest that one to my husband. I like that that’s more specific…you can see exactly what you spent your money on versus just seeing you spent $45 at the grocery store.
Mrs. Maroon saysat
Good job on lowering the bill! It’s amazing how we can fool ourselves into thinkinh we are doing a good job with spending. But tracking the details gives you a completely different perspective. So important!!
It really was SUCH an eye opener for us!! I can only imagine what people who make more money than we do and don’t track their spending actually spend. It could easily be $4K a month and you have nothing to show for it – crazy!!
Jayleen @ How Do The Jones Do It saysat
It is amazing how fast those expendables add up. We have saved all receipts for a month in the past to really investigate where that money is going. We couldn’t find any place to cut. What slackers we are;0)
Saving receipts is a great idea!! You can get more specific with what you spent money on versus just seeing an amount at the grocery store. That’s actually good that you couldn’t find a place to cut – it means you are maximizing your budget!! Congrats!!
For step 4, another tip I’ve heard is to save twice the value of what you want. For instance, if you want to spend $1000, you save $2000, buy your widget and then bank the other $1000. Kind of forces you to save and you get rewarded for it […]
Oooo I love that idea!! I’m going to give that a try next time I want something, thanks!!
That idea is amazing. I will have to try that!
We’ve used Mint for years and that’s exactly why it’s been so valuable. We see how many $$$ we’ve spent, even when we’re lazy and don’t pay attention to it. Great job reducing your expenses!
That’s great that you guys were able to save so much by tracking your expenses and being more mindful of your purchases. I know that pretty much every time I am at the grocery store or Target I buy something unessential. If I was more mindful I know I’d save more.
I love Step 4! I have started making this into a game for small purchases, like splurging on coffee. If I want the coffee, I’ll do a quick mystery shop through an app on my phone and consider it a wash 🙂
That’s awesome!! I would love to know more about mystery shopping!! Sounds right up my alley haha 🙂
I disagree about using Mint…after the hacker scandals of 2014 I *refuse* to put all my info on the cloud or similar sites. A lot of banks and credit unions have Mint-like software where you can budget, see your spending, set goals, etc. I’m a millennial, I’m not afraid of computers, but after those scandals I’m too scared.
I use a well known bank, and they have free software that I use to see my spending, budgeting, etc. I realize that banks can get hacked too, but since my bank has my info, why give access to another website like Mint. The less info is out there about me, the better, imho.
However a person decides to keep track of their spending and finances, just keep track of it. I agree with you there. =)
Hi! Thanks for the comment! You make a very valid point about the scandals with Mint. I’m probably a little too trustworthy, but the site is working great for us! Part of our problem is we bank with three different banks. We’re consolidating this soon and perhaps will look into relying on our banks software to keep track of our spending. But I totally agree in that as long as you’re keeping track, you’re good!
Laurie @thefrugalfarmer saysat
People SO often underestimate the amount of money they spend when they’re not spend-tracking. We found the same budget leaks that you did when we decided to go back and track the money we spent in 2013, having never had a budget before. We spent roughly twice what we assumed we did on non-bill expenses. It was traumatizing, but it made us understand why we’d always been broke! Spend-tracking and budgeting saved our financial lives.
Sarah Brooks saysat
Oh yeah!! It’s crazy how much of a difference it makes just by being aware (and actually being aware, not just guessing!!). Even this month we’re over on groceries so far, but if we didn’t track it, I would honestly assume we were under because we haven’t eaten out!
This is great! It is a shocker when you start pulling those numbers. I did a blog post on this exact topic just a few days ago- about how we reduced our household expenses by more than 50%!!
(if you’re curious about it, you are welcome to view my *tiny* little mom blog and read it) BTW- what part of NC are you from? We lived in Asheville for 10 years!
Sarah Brooks saysat
Hi Kristi!! Thanks for the comment!! I read your blog post – you guys are amazing!!
We live in Charlotte, NC! We just moved last August from AZ and love it! We’ve been to Asheville twice since living here – it’s gorgeous!! Where do you guys live now?!
We live in Williamsburg, VA now. My sister lives in Charlotte – it’s really a great place! (Not too small, not too big!!)- Thanks again for visiting my blog!!