The idea of a budget is not a new one. You work out how many dollars come in as income and then you work out how many dollars go out as expenses. You add a few categories for things like savings, clothing, and entertainment, and then cross your fingers and hope like heck the numbers balance.
And they seem to – on paper. But if you keep going over budget week after week. it might be time to look at how other factors in your life might be sabotaging your efforts. These factors can cost you literally thousands of unnecessary dollars a year and blow the best constructed budgets out of the water. And if you’re wondering what I mean, have a look and see if the scenario below sounds familiar.
You’ve just finished a late work meeting, when you remember you still haven’t got your mum a present and it’s her birthday in two days. You race into town and buy a book you know she wants. You’ve seen it on sale at another store, but you can’t make it there before closing time. Then you race to the post office, where you pay double what you normally would couriering the present to get it there on time. You had planned to go to the supermarket, but it’s too late to do that now. Instead, you stop off at the local store and hand over virtually your life’s savings for toilet paper, because if there’s one thing you can’t not have, it’s that. Then it’s a stop at a fast food restaurant to pick up dinner because not only do you not have time to cook, but you don’t have the ingredients either. Arriving home, you get the mail and discover that because you missed paying your phone bill on time last month, you’ve been slapped with a $20 late fee.
From this small illustration, it’s easy to see the spin-off effect of organization and the toll the lack of it can take on your finances. So here are 10 areas in which to focus your efforts so you can start meeting your savings goals, rather than wondering why you never have enough.
(I’ve estimated how much you could save a year by putting these ideas into practice, so you can see the potential power of the changes. But bear in mind, these are approximations only and also that New Zealand is quite different to other countries, not only in things like the price of consumables, but also things like how we have to pay out of pocket for dental care.)
Meal planning saves you money in so many ways. Firstly, you buy only what you need and therefore reduce wastage from unused perishables. Secondly, you can plan your meals around existing commitments, aiming for quick and easy on nights when you’ll be home late and slow and elaborate when you have time to experiment in the kitchen. For example, on Tuesdays we exercise after work, so we always have a slow cooker meal that was prepared the night before. I also have a small stash of pre-prepared meals so that when unexpected things do happen, we don’t go straight for takeaways because we know we can get dinner on the table in ten minutes. If you want some more specific tips on how to meal plan, check out my post on Top tips for meal planning.
Food is expensive in New Zealand, including takeaways, so I estimate you could save $50 a week from meal planning, or $2600 a year.
Make lunches at home.
Work out what you want to eat for lunches when you do your grocery list. As part of this, harness the power of leftovers. Cook double if you can, or when kids move out, just keep cooking the same amount. I plan for meals so we have leftovers at least every second night, so there is an alternating supply of them for lunches.
If you spent $10 a day on lunches, times at least two people, that’s another $100 a week, or $5200 a year.
Buy groceries once a fortnight.
Going to the supermarket less frequently, and having a list of what you need to buy, means less temptation for impulse purchases, and less of, oh we should get some more of this… If you run out of something, unless it’s really urgent, you do without until the next shop (So you don’t run out of stuff, make it a rule that if anyone in the house uses something up, they write it on the shopping list. I have a magnetic list that goes on the fridge for this purpose). Don’t forget to check the supplies of herbs and spices you’ll need as identified on your meal plans – especially if you’re experimenting with something new.
If possible, do this fortnightly shopping online. This practice has cut my grocery bill by over 40% as I make my groceries fit my budget, not the other way around. It also makes impulse purchases impossible, and reduces stress as there is no uncertainty regarding the cost of your purchases. The other way this saves money is what I mentioned in my anecdote above: if you have to stop off at local stores (like service stations or dairies here in New Zealand) you often pay three times the price – so better to be organized with a great list.
In addition to the savings above already mentioned, shopping fortnightly saves an estimated $50 a week, or $2600 a year.
Plan to take food to events (where possible).
This is my final tip for food-related savings. Many events will allow you to bring in your own food, and sometimes drinks as well, if in a sealed container. Doing this not only helps you save money but also results in much healthier choices. For example, yesterday my husband and I went to watch our national cricket team play Australia in a one-day game. The game started at 11am and ended just after 7pm, so it spanned two meal times. Usually, we would have bought everything at the game. With burgers at $8 each, hot chips at $5 and drinks also at $5, we could easily have spent over $70 for lunch and dinner, and also dumped a tonne of unhealthy food into our systems. Instead, we took empty water bottles (fresh water was there and empty bottles were allowed), fruit, crackers and dips, and so on. That cost us $26 and not only was tastier, but more nutritious.
Estimating you might do something like this once a month, your savings could be $50 a month, or $600 a year.
Set up a system to pay your bills on time.
Virtually all bills have late fees attached, or, like my power bill, have a 10% discount when paid on time, which is a clever way of re-framing a late fee. Your goal should be to never pay another late fee because you just forgot to pay a bill. There are many ways to do this: set up a direct debit or make automatic payments with your bank, or have a designated bill-paying day. I get most of my bills via email, and save them in a folder, and then pay them once a week when I’m checking my budget. I know which bills come due in which pay period so I have the money set aside for them. Test out different options to see what works for you.
Imagining you paid two bills late a month, that’s an estimated savings of $40 a month, or $480 a year.
Do all your errands on the same day once a week.
Whether this is picking up drycleaning or the groceries as mentioned above, have a designated day set aside. This is to save both time and petrol. If you have to go all over the place, plan your route to be more efficient. This produces an estimated savings of $10 a week, or $520 a year.
Buy gifts in advance and post them with plenty of time to spare.
Buying presents in advance means that you can make a choice based on price rather than convenience. I saved a tonne of money last year by buying all my Christmas presents in early November. I bought books online from overseas that cost 50% less than in New Zealand and had free shipping. I found an item that was being sold in several stores so bought it where it was cheapest. I was then also able to post the gifts at the cheapest rate.
This amount is hard to calculate, as it’s totally dependent on how many gifts you buy and for whom. We spend about $2500 a year on gifts, and I believe it would easily cost an extra $500 without careful planning.
Make and keep regular dental appointments.
Dental care in New Zealand is free until you are over 18, but after that it will cost you. Paying for the dentist is never a pleasurable experience, as it’s expensive, often painful, and is easily put off- that is, until something goes wrong. My husband skipped dental care for years, only visiting when in agony, which resulted in a couple of teeth having to be pulled out. The cost to replace these two teeth is about $10-$12,000 in New Zealand dollars. A dental check-up is about $120 and a hygienist about the same. That’s 50 years of visits for the same price as those two teeth! The same can be said for regular medical check-ups. Ask your dentist to book your appointments and email / call you when it’s a month or so out of the date. Then you can reschedule is it doesn’t suit, but at least it’s on your radar.
Again this is super hypothetical, but imagining that no dental care resulted in one tooth replacement every five years, say for a maximum of 20 years, that’s $24,000 – versus $4800 for check-ups – a savings of $960 a year- and a lot of pain!
Service your car and any other item that needs regular maintenance.
This works on the same principle as your teeth: regular care and attention can lead to massive savings down the line. In addition, many items void their warranties if they are not serviced as instructed. Take the year overview in your planner and write in when you need to do things like check air filters, get cars serviced and so on. When you purchase something that requires maintenance, read the manual check the requirements, and add it to your planner straight away.
Guesstimated savings: $500 a year.
Take advantage of early-bird specials.
There are so many things that offer early-bird discounts. Hotels, plane tickets and rental cars come immediately to mind, but also things like courses can offer huge discounts the earlier you get in. However, you need to be organised to take advantage of these. Know where you would like to vacation this year and book everything as soon as you can.
With one week-long vacation a year, you could easily save $1000 on your trip through utilizing early-bird discounts.
My hypothetical scenarios combined amount to a savings of over $15,000 in a year. That’s a massive amount of money to either waste or to save. It requires time and attention to get yourself to the point where these strategies become second nature, but if you’re serious about sticking to your budget and saving money, they will help you to achieve your goals.
I’d love to hear other organisational tips that lead to savings. Share your ideas in the comments!