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I’ll admit it: I avoided thinking about spending and saving for years. I somehow always managed to balance my finances in the end, but I missed out on a lot of additional savings in the process. I don’t want you to make the same mistake.

You don’t have to create a complicated budget to start saving. But you do have to be honest with yourself about where your money is going. It can be difficult to come to terms with how much you spend, and how many less-than-necessary things you buy. 

In retrospect, the reason I struggled to save early was that I simply didn’t know where my money was going, and I didn’t prioritize my spending. I changed jobs, got raises and promotions, even got married. But those changes only obscured the real problem: every time I earned more my expenses always found a way to catch up. 

After one of my first big raises I immediately rewarded myself with a top-of-the-line Honda Accord, and a $500 monthly payment, plus increased cost of insurance. It was a great car, but an excessive and unnecessary purchase given my perfectly functioning and nearly-paid-off vehicle.

I eventually realized that something had to change, and over the next few years I went from spending almost all of my income to regularly saving between 20 and 40 percent. Most of that with only minor adjustments to our lifestyle and habits. In order to get to that point, I started with some small simple steps that are not overly time-consuming and intimidating. 

Step 1: Where is the Money Going? Track Your Expenses

In order to understand how you can save money, you first need to understand where it’s going. Since we’re not building a whole budget here, what you can do instead is look at your a few months’ worth of bank and credit card statements and categorize your spending each month into three categories: Bills, Spending, and One-time Expenses

Bills

Any bills you absolutely have to pay; that includes your rent or mortgage payment, insurance payments, other loans, and utilities.

I included any recurring payments or bills that I paid every month. Be sure to include the monthly portion of things you pay only every few months, such as auto insurance.

Spending

Anything that is not absolutely necessary or that can be modified. 

This list includes groceries, restaurants, take-out, clothes, streaming music and TV services, entertainment. Anything that isn’t under the bill category ends up here. (Some big items that you don’t spend on regularly, like a new TV, couch, or a random medical bill can be categorized separately as one-time expenses.)

Now add up all the lines under Bills and Spending. Those two totals are your approximate monthly expenses. Keep in mind we are just getting comfortable with this process and not trying to make an exact list or be too precise.

One-time Expenses

I struggled with how to deal with these at first. I tried to average them out as regular monthly spending, but that only blurred the picture and I would lose sight of what they were. I settled on leaving these outside of the Spending section. Now, I save up for these larger purchases while still maintaining my target savings rate. 

Step 2: Categorize Spending

I focused on Spending first, since that’s where I had some control and could see immediate results. Start by going down the list and creating smaller buckets of spending, such as Restaurants, Groceries, Entertainment, and so on. It’s up to you what the buckets are, but the idea is to combine common expenses.

After that, I went down the list and started reducing the amounts I planned to spend in each bucket. The most obvious and easy one for me was eating out; I knew we ate out frequently, but I didn’t realize just how much we were spending until it was all in front of me on paper.

Keeping a close watch on your expenses is difficult when you’re single, but it’s exponentially more so when you’re married. I can also only imagine significantly more complicated if you have kids. It requires communication and openness that can easily come across as an attempt to control the other person.

We’ve had to work through that, and it helped to set some common goals to keep things positive. That’s not to say my wife has expensive taste, quite the opposite actually; she would always look for good deals, but would inevitably fall into the overspending trap anyway. She’d just spend more frequently and in smaller amounts. After seeing the early results of us planning together she was fully on board.

When you go down the Spending list, eliminate or reduce anything you think you could. This is also where you can decide what is important to you, and reduce the categories you care about less. If you’re not careful, it’s easy to spend a fair amount of money on stuff you barely even care about.

Some examples:

  • I was going out to lunch about four times a week, so I reduced that to once or twice a week. I actually enjoy it more, and look forward to it.
  • I reduced my trips to the grocery store from three or four to one a week, which in turn meant less chaos and more deliberate purchases. It takes a little planning, but fewer trips also allowed me to have a target for how much I wanted to spend on each trip.
  • I also replaced some paid entertainment with free options or things I already pay for. The most obvious thing here is getting rid of cable. I did that several years ago and never looked back. Same thing with books or audio books; there are lots of free options, and you can use an app to borrow them from your local library.
  • And what about Bills? With a little bit of thought, over time bills can be trimmed, too. A slightly smaller apartment. A less-expensive car. A cheaper health plan. The truth is that skipping that weekly latte isn’t going to make that much difference if you’re spending $500 extra a month on an apartment with a guest room you rarely use.

Step 3: Set Your Weekly Spending Goal

Now that you’ve reduced your monthly spending on paper, divide the categories you’ve created into 4 weeks. These are your weekly spending goals.

It’s best to write your spending down, but you can also just keep a running total in your mind for some things. For instance, knowing that you’ve gone out to lunch twice this week and spent no more than $30. This can be a tedious exercise, though there are automated tools and apps to help. But I found that even keeping an approximate total will help with staying on target. And once you have a system it becomes a lot easier.

The main focus here is to reduce spending, but you can factor your income into the picture and see what your savings rate is. The frequently recommended rate for saving is 20% if you were to follow the 50/30/20 or 70/20/10 rule, but I like to aim higher, especially because we still have one-time purchases to plan for.

So that’s my easy method to go from a spender to a saver without (too much) pain. In some ways, it actually became kind of a game with both me and my wife to save without hurting our lifestyle. Really, it was all about being more mindful of what I was spending, and only spending on things that really gave me enjoyment. And while I do miss a couple things, the reward of being much more financially secure far outweighs any sacrifices I’ve made.

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