budget bootcamp week 5: simple savings

So how did it go last week?  If you’re new to the challenge, last week we were looking at how effective it can be to make your savings and payments automatic.  It’s about prioritizing our goals and future and understanding how much of an impact the choices we’re making now have. 

I have a confession to make.  I haven’t been very diligent lately in keeping myself accountable to our budget.  With Craig away and myself and Emily home day and night, I’ve being doing a lot more shopping and eating out than I want, simply for something to do outside of the house.  Trust me when I say that all of these little expenses can add up to a big leak in our budget.

My biggest indulgence is hitting up Starbucks for a Pumpkin Spice Latte, and at around $4 a pop, and a twice a week visit, it’s a $400 a year habit!
$4 x 2 = $8 x 52weeks = $416
(And let’s not ignore the 310 calories for a Grande.  That adds up too!)

I don’t smoke, but if you’re a pack a day smoker, your stealing more than just years off your life; you’re giving away more than $2900 a year. Unfortunately, that’s not the worst of it.  If your 25 and instead invested that money in even a money market account, you’d have almost $300,000 by the time you retire!  Add on to that the fact that many health organizations claim that each pack actually costs you (and the government) $150 when you factor in healthcare needs, you’ve got an expensive habit!

What is your fix?  If you did the math on it, how much are your spending per year to keep it up?

What Does it All Mean?

Budget is a bad word to a lot of people.  If you’re like my husband, it makes you feel restricted and too much time on a budget may make your impulse shop.  If you’re like me, budgets, and the savings and financial security that come with them, help you feel more in control of your life.

I’ve said it before that I truly think that budgeting and successful financial planning is about priorities, so it is important to sit down (with your significant other if you have one) and decide on some sort of plan for your life.  It doesn’t have to be a strict ‘5 year plan’, but just the basics of what you would like to accomplish.  Do you want to be mortgage free before retirement?  Is travelling important?  What about paying for your kids education?  Each of these questions require action from you today. 

You won’t be mortgage free at 65 if you’re not working to get your other debts paid off and then turning your focus towards accelerating your mortgage pay down.  Travelling can be expensive, so it’s important to begin setting money aside in your sinking funds now for those trips you’d like to plan down the road.  And that education fund?  Don’t forget that compound interest means that the earlier you start, the less you have to invest in the long run.

Budgeting is not about restricting your spending or focussing so much on saving money that you lose sight of enjoying life.  It’s about taking ownership of the income that comes into your home and giving every dollar a job.  If you’ve set up a successful budget, it will not only be moving you towards financial freedom and reaching the financial goals you have in mind, it will also give you the emotional freedom to enjoy your life today.  You don’t have to spend time worrying about how to pay the bills each month if you’re living within your means and setting aside money for those emergencies.  You can do fun and memorable things with your kids while they’re still small because you’ve set up a sinking fund for family outings or an annual zoo membership.

 

This Week’s Challenge

Take one final look at the budget you’ve been creating and see if there are any areas you would like to change.  Any categories higher than you’d like?  Any lower?  If you would like to up your savings or debt repayments, you know it needs to come from somewhere else. 

Once you’ve identified those areas that can use some downsizing, come back next week for a tips and tricks for getting the best bang for your buck in the areas of grocery shopping, bills, personal care, and finally two weeks of GIFT GIVING!  We’ll be ending on December 3rd, so I’ll do a round up of my favourite gift projects both here at Canadian Rhapsody and around the blogosphere, so check back!

Psst!:I already started one gift project: DIY Vanilla Extract!!  It needs 8 weeks to fully age, so get started!

 

In case you were wondering, in response to the Starbucks problem, I’ve switched to cider when I’m there (much cheaper!) and have found an at home pumpkin spice latte recipe that takes the cake!