Friday, June 25, 2010

The Savings Are In The Details

Tip #262 - The Savings Are In The Details. Have you ever noticed that the small things are often what make the greatest impact? By virtue of being so small, they hardly get noticed at first until they all come together and exert their influence. When writing a budget or looking at where we can save the most money, we usually take into account the big stuff such as our rent, our car payment, and our insurance. But some of us don't bother looking at the small stuff. For example, would anyone consider a stop off at 7-11 on a hot day for a 99-cent Slurpee to have an impact on our wealth? What about that take-out you get each weekend from your favorite pizza/Chinese/burrito place? Does tossing a magazine on to the conveyer belt every few shopping trips to the grocery store make a difference to your savings?

Well, of course they do! Unless you have specifically in your budget accounted for $24 for your once-per-month $2 magazine habit, it is making an impact on your savings. And the frequent trips to the drive-thru are eating away at your savings if they are not part of the plan. Picking up small gifts for your little ones at the Dollar Store influence your savings rate as well.

If small things make a big difference, then what can we do about it? The best thing is to try to plan as best as possible all of your small purchases. How many people include greeting cards into their budget? Very few; I imagine. Yet a trip to the Hallmark store can often lead to double-digit purchases. Same thing with postage stamps. Mailing out 2 birthday cards per month will set you back over $20. But are they in your budget? Probably not. How about the last-minute stops on the way home from somewhere or when you are out? The suntan lotion you pick up on the way to the beach. The large soda at the mall because you are thirsty. These types of purchases sneak into your savings account and attempt to wipe it out.

So when you are considering how much money you can save each month or writing up a budget, make sure you take into account all of your spending - including the very small purchases you make. And on the other end, if it's not in your budget, then don't stop at Wendy's on the way home from the pool for a Frosty. Skip tossing the TV Guide into your shopping cart. And think ahead about all of the things you will need before setting out for the day or the weekend - snacks for the children, drinks for everyone, a swim diaper for the public pool. The fewer small purchases you make, the larger your savings account will be.

In Real Life (IRL) -
We are packing for our annual family vacation to Cape May. And it is in doing this packing for a family of 5 that I realize the devil is in the details. Nothing bugs me more than having to purchase something while on vacation that I have a duplicate of sitting at home - a pail and shovel, bug spray, and flip flops. These small things are so easy to forget, and they can add up to a small fortune at tourist destination.

We know we will buy groceries at the higher-priced supermarket at the beach, but it's part of our vacation budget. We plan to spend a certain number of dollars on attractions and ice cream cones. But we don't budget for stops at the t-shirt store to buy a sweatshirt for a cold day. Or for the ponytail holders that we forget from home. Or for the overpriced toddler hand-holder/leash for a feisy 18-month old (which was a lifesaver!). These are all small purchases we have found ourselves buying because we didn't plan properly. Yes, we do have a catch-all category for those miscellaneous items. But truly, I'd rather have $20 in my bank account than an extra sweatshirt that I don't need in my dresser drawer.

So when budgeting, think about all purchases you make - not just the big ones. The small ones count, too. This is why experts often tell you to keep track of expenses for a month or two in order to write up your budget. Because it's so easy to forget things like stamps and drinks and sunglasses. In addition to having an accurate budget, do your best to plan what you will need when you leave your home. That is usually when you buy these small things. If you think you will be out all day, throw a water bottle in the car, bring a hat for the little ones, and pack that sweatshirt in case it gets cold. The more prepared you are, the less you will spend. And on the tail end, unless it is an emergency, resist throwing money at unbudgeted items that you can do without - the drive-thru milkshake, the cute souvenir that will sit in a drawer for years unplayed with, or the latest gossip magazine. Being aware of these small things will make your savings account bigger in the end. And that's what saving money in real life is about. We're off to Cape May for the week. I will post more when we come back unless I find that there is suddenly WiFi at our hotel. (I haven't included the Internet Cafe in my budget, sorry.)

And as a PS to our earlier post about possibly moving: my husband turned down his job opportunity. Lots of things about it didn't add up for us including the financial aspects. So we are staying put. Fortunately, we have a while to decide what our next steps will be. Thanks for your support!

1 comment:

Brittany said...

Michelle--I always enjoy reading your blog, and check it every day to see if you have posted something new! Hope you have a great vacation, and I'm really glad that you and your family are able to stay put. It is awesome that your financial diligence has allowed your family that choice!