Budgeting grows your nest egg.
There is no easier way to keep money in your pocket than setting a reasonable expense limit each month and sticking to it. One cold day in December, after spending far too much on UberEats, I decided to take budgeting seriously. I created Google Sheets spreadsheet with the first page dedicated to monthly totals, and the rest of the tabs to keep track of all purchases and bills. You can download the spreadsheet below.
Using a Google Sheet is quite simple, and the best part for me is being able to add purchases on the fly from my phone. I will literally purchase a cup of coffee and snack, open the app and add it. It takes all of one minute. Doing this taught me a couple things:
1. The cost of living (essential purchases) is far too high.
2. Eating out is the greatest expense and easiest to cut.
3. Setting a monthly target keeps your wallet in check.
My challenge to you is this:
– Calculate fixed costs: rent/mortgage, insurance, transportation (car/transit), phone, internet, utilities, etc.
– Calculate food costs: input all grocery store and outside food purchases.
– Calculate miscellaneous: all other expenses including nights out, gifts, books, other personal purchases.
You must try this for at least three months.
This will give you a baseline running average of your expenses. Granted, some months you will spend more than others (birthdays, trips, Christmas/holidays, etc). What you want to do is review your expenses at the end of each month and see where you can start saving. For me, this meant eating out less – a lot less. By doing so, I put several hundred dollars each month back in my pocket. For others, this means cutting back on junk and other non-essentials at the grocery store, or perhaps purchasing no name brands for certain foods (like canned goods). Keeping an eye on sale items and budgeting your meals around that also helps.
I am by no means advocating a “frugal” lifestyle (but if that’s your thing, go for it). The cost of living is expensive, and there’s no way around it. However, budgeting helps visualize costs and is a great way to isolate necessities and cut back on some frivolous spending.