“I can’t afford to save.” – How to save during tight times

This year my biggest goal for our family is to save more. With two kids and one on the way we have a number of expenses that have creeped up over the last few years. From diapers to groceries it seems that having additional little people around really digs into our budget. Finding the money to put away into a savings account has become less and less of a priority when it should be the opposite.

So what do you do when you don’t think you can afford to save?

It takes a little extra time and effort but it is possible. With the additional laughter, tantrums and stinky diapers comes unexpected trips to the doctor and $3.99 orders of macaroni and cheese at the restaurant that the toddler will inevitably refuse to eat. How is it that my husband and I used to go out for a date night and have a $20 dinner bill and now that barely feeds my kids? I think a cheap, family-friendly restaurant that delivers food instantaneously without the threat of contracting the ebola virus in the process is like the mythical unicorn of the world.

Ok, back to how we accomplish this task of saving for these unexpected increases in our expenditures. Your biggest tool in this task will be strict budgeting. Your second biggest tool will be levelized billing options. Third, you will have to menu plan. Ok, let’s go through these one by one.

Budgeting:

Sure, we all know what this is. How much money do I have? What bills do I owe? Whatever is left is what I use for gas, food and entertainment…. right? Ok, if it was this simple we could all do it pretty quickly. The bottom line is that you are missing the most important part of budgeting. SAVING.

Many times in a financial article or class you will hear the phrase “pay yourself first”. Financial planners and advisors love this phrase. It refers to the thought or practice of taking the money out for YOU first and living off the rest. So if you were working a full-time job where you had the opportunity to put money into a 401k, that money comes out pre-tax. Meaning you never even see that money in your bank account. This is one way to pay yourself first.

Another way to pay yourself first is to set aside a set amount each month before you have the chance to spend it. This is the part most of us suck at. You see the money in your account and then it gets moved and all of a sudden it was taken from you. You want to run after it and say “wait!! I need you!!!!!” This is almost always followed by the feeling that if you need that money you can always get it back. Here is where most of us fail. We run out of money, we transfer a little back from our savings account to cover an expense promising ourselves to repay this bridge loan… you know where this is going.

Here’s where you need to modify your way of thinking about this. Saving should be a bill. It should be gone once you move it out of your checking account. Never to be recovered. Well, ok SOMEDAY you will access it. Just not today.

How do you change this mindset? First, I think the best way to save is to put the money in an account at another bank. We use Capital One 360 accounts for our primary savings. The reason for this is to prevent me from staring at the money. Honestly I forget about it most days. You can set up automatic transfers into this account on a regular basis. I would suggest starting small. $50 after each paycheck will be enough to get you going. After a few months, you up the amount slightly. Pretty soon you’ll be putting money aside without missing it.

Levelized Billing:

Another big key to saving is to be able to predict your expenses each month. Levelized billing is a great tool that almost every utility company will offer if you ask. Our utility companies required us to have up to a year in history of paying our bills on time before they would allow us to set it up. Since we live in the South our electricity bills are significantly higher in the summer versus the fall and winter. It is so nice to be able to pay an amount each month and not wince every time I opened the bill.

Menu Plan:

Ok you may be doubting me on this one. I get it. Menu Planning is a pain in the financially responsible ass. I hate doing it. Each week I procrastinate doing it. It takes too much of my energy and requires too much effort. However, if I don’t menu plan, I end up spending TWICE what I would. Also, my cupboards end up being clogged with crap. And to make that all even worse, I still have no idea each night what I’m going to make so I end up ordering out.

Menu Planning while such a pain, is financially worth it. First, eating in is much cheaper. Second, I can lay out meals and utilize ingredients over and over. For example I can plan a roast chicken on Sunday and utilize the leftovers to make chicken salad for lunch later in the week, thus reducing waste. Third, menu planning keeps you on track with dietary goals, etc. Mainly this just means that my kids won’t have to eat macaroni and cheese more than twice a week.

Try this for two months. If you can’t find any extra pennies then it is probably time to revisit your expenses and look for areas where you are wasting money (ie: subscriptions you don’t use, etc.).

If you don’t want to try this you could always just start a jug. You know I love the jug.

**Capital One 360 is the savings account we use. Formerly ING Direct. I was not compensated in any way to promote them. I just really like them and have had a good experience.**

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