Financial New Years Resolution

[beckie.c]

Another one that my friend used was that she kept a journal of sorts. She wrote down every single item and from where and how much she was spending on take out/restaurants/coffee. At the end of the month, she calculated what she spent, took that from her take home pay and realised she was spending almost half of what she made on eating out and coffee. Even if you aren't necessarily a visual person, I think it always helps to actually see it in that it makes more of an impact.

I have started tracking everything as well. Since I don't ever use cash, I definitely need to track to keep from swiping uncontrollably. I use the cash journal app, just because my phones always on me and I can export it at the end of each two week period to enter into my budget spreadsheet. Its crazy how fast small $5, $7 transactions add up! The app has some awesome features like letting me see how much I've spent on a category for any period of time, makes it super easy for me to recognize when I need to put on the brakes for my coffee/eating out budget.

[blueeyetea]

As you save it might be helpful to try thinking in terms of your take home pay per hr-your salary minus tax, EI and CPP and anything else you have to pay. Then think in terms of is it worth it to work 20 minutes of my day for a coffee or half a day for these new jeans or should I bring a coffee from home and check the thrift store for clothes?

I'd go even further than that, just like they explain in the book Your Money or Your Live (step 2 to be exact), to calculate your real hourly rate, remove from your take home pay any expense that you incur because you work. Obviously, like lizzie bargain says, you have the expenses directly related to work like clothes, lunches, car insurance, but no one thinks about adding nice dinners out, vacations, healthcare expenses. It will bring down your real hourly real fast. Is that $3 cup of coffee worth it if you knew you had to work one hour for it? Or five hours if your habit is 5 a week? Or 20 hours over 4 weeks?

LIke they say in the book, we trade our life energy to earn a living. Every time we spend money on things we don't need, we not only waste our life energy, and it also takes us away from the ultimate goal of not needing to work so much.

[blueeyetea]

Another one that my friend used was that she kept a journal of sorts. She wrote down every single item and from where and how much she was spending on take out/restaurants/coffee. At the end of the month, she calculated what she spent, took that from her take home pay and realised she was spending almost half of what she made on eating out and coffee. Even if you aren't necessarily a visual person, I think it always helps to actually see it in that it makes more of an impact.

But the problems with just coming up with totals, finding they're high, and cutting back can bring up the issue of being deprived unless there's another reason that can override it. If your friend realised she was buying take out and coffee out of habit and she didn't need it, the decision to stop is easy. If on the other hand, the spending occurs because she's out socializing with friends, then the solution isn't as obvious if she values those friendships. The expense might be completely justified, or she could come with alternative ways to socialize with her friends and get them involved.

That's another step they have in Your Money or Your Life, where you calculate a total every month of what you spent in different categories, to which they add the exercise of asking yourself if what you spent in each category brought value/fulfillment to your life. (Actually, they are 3 questions, but for this discussion, the one about value/fulfillment is the most relevant one.) In other words, we have to analyse what's pushing us to spend and if it's justified according to our life. I would also like to add that just doing it for three months isn't enough to see any specific patterns emerging. For me, it took five months for the first epiphany to hit me that I was spending money on hobbies I didn't have time for. Then it was the monthly magazines I didn't read. After that, it was the impulse purchases influenced by advertising at the mall. And on it went. None of these expenditures were a hardship to give up once I realised they served no purpose in my life.

(I'm no saint. I still buy the odd magazine because of a headline that catches my attention. But man, the guilt I feel because I got suckered again just reinforces my willingness not to fall for it next time.)

[trishka]

But the problems with just coming up with totals, finding they're high, and cutting back can bring up the issue of being deprived unless there's another reason that can override it. If your friend realised she was buying take out and coffee out of habit and she didn't need it, the decision to stop is easy. If on the other hand, the spending occurs because she's out socializing with friends, then the solution isn't as obvious if she values those friendships. The expense might be completely justified, or she could come with alternative ways to socialize with her friends and get them involved.

That's another step they have in Your Money or Your Life, where you calculate a total every month of what you spent in different categories, to which they add the exercise of asking yourself if what you spent in each category brought value/fulfillment to your life. (Actually, they are 3 questions, but for this discussion, the one about value/fulfillment is the most relevant one.) In other words, we have to analyse what's pushing us to spend and if it's justified according to our life. I would also like to add that just doing it for three months isn't enough to see any specific patterns emerging. For me, it took five months for the first epiphany to hit me that I was spending money on hobbies I didn't have time for. Then it was the monthly magazines I didn't read. After that, it was the impulse purchases influenced by advertising at the mall. And on it went. None of these expenditures were a hardship to give up once I realised they served no purpose in my life.

(I'm no saint. I still buy the odd magazine because of a headline that catches my attention. But man, the guilt I feel because I got suckered again just reinforces my willingness not to fall for it next time.)

I see your point, it really does depend on why you're spending that much. In her case it was just because she was too lazy to plan and make lunches and dinners and didn't think she had time to make coffee in the morning. She now has a coffee maker on a timer so she has all but cut out buying coffee and she plans lunches and dinners, which saves her from buying take out at lunch. I asked her about this and she says she doesn't feel deprived of it but actually feels better now as she knows she's eating better.

It really does depends on your lifestyle. If you're constantly on the go or don't work in an office environment it might be harder to refrain from buying take out. So based on the point you've made, if someone is planning on doing a journal, it might be helpful to put a note about why you've eaten out (ie. Dinner with Jane, early morning conference, late night at the office, drinks with co-workers etc.)

[beckie.c]

So we are now one month into the new year, how is everyone's financial goals going? I'm definitely feeling the burn on my goals since I've slugged away a full pay check this month to various savings accts.

[trishka]

So we are now one month into the new year, how is everyone's financial goals going? I'm definitely feeling the burn on my goals since I've slugged away a full pay check this month to various savings accts.

I've been doing pretty well. I've spent on things that were not in my budget but it was a $20 jacket for the spring and the fall so it's not useless. I've made the full 10% anniversary payment on my mortgage and I'm saving for next years payment.