As the syndicated Funny Money columnist for The Detroit News, I thought trying to cut my family's personal spending would be emotionally fraught. But when managed properly, this turns out to be the family budget category that ensures wedded and financial bliss, with no arguments about why I can't spend $30 on designer duct tape, and no accusations that Mrs. Funny Money fritters away our hard-earned dough at the nail salon. To eliminate petty squabbling, we decided that petty cash would be divided into categories of "Yours," "Mine," and "Ours."
(I'm only going to hit the high points here, but if you want more details, check out my book, "The $1,000 Challenge." In my 10-week experiment, I cut an average of $100 each per month from my 10 biggest family spending categories, saving $1,000 in monthly spending.)
A check of my sketchy bookkeeping on the personal spending category found that Mrs. Funny Money and I averaged $52 a week in personal spending on clothes, skin cream, visits to Starbucks (SBUX) and other sundries. Most of the money came out of our accounts via ATM withdrawals, to be spent in cash, but reviewing the debit card purchases at least gave me a notion of where my personal spending money was going -- and there was certainly room to save.
My biggest outflow was lunch, which I should pack, not only for financial reasons but health reasons, too, since I work just a few blocks from Detroit's two greatest Coney Island restaurants.
The ugly surprise was that I'd paid almost $10 a month in bank fees that year, for ATM surcharges or when the account balance fell to the point where I incurred a maintenance fee.
My money coach, Robin Thompson of Budget Wise Consulting in Sterling Heights, Mich., had the answer: cash.
"When it comes to debit and credit cards, I call it 'magic money,' " she says. "You never see it as spending real money." Thompson advises using the old-fashioned but reliable envelope system for any type of discretionary spending. "These variable expenses get us into trouble because they're prone to impulse spending," she says. "We don't say, 'Wow! Let me make an extra car payment!'"
The biggest embarrassment of my entire 10-week series of budget-cutting columns was the fact that I was paying about $10 a month in fees to get back my own money at the ATM. I've railed against these outrageous fees for years, and yet I still got nabbed by them. But you can sidestep ATM fees with some shopping and planning. Online banks and some credit unions will give you a set number of free ATM transactions each month at any machine, or they might rebate any ATM fees you pay. Credit unions also operate a fee-free network of machines.
Paying cash for small purchases helps you avoid another nasty bank charge -- the "courtesy overdraft" fee. It's easy to lose track of small purchases, especially if you and your spouse are making them on debit cards, and then -- wham! -- a $4 sandwich gets you socked with a $35 overdraft fee. Besides cash, your best bet is to carefully track your balance, set up account alerts if your bank offers them, and link your checking account to a savings account or credit card for cheaper overdraft protection if you happen to slip up.
The other cool part of paying with cash is that you spend less. Cash feels more "real" than paying with anything else, from a credit card to trinkets and beads. Studies have also found that parting with your hard-earned greenbacks is physically uncomfortable -- they call it "the pain of paying."
When it came to saving on lunches, I was amazed at how little effort it took to save a significant amount. A typical lunch in the cafeteria used to run me about $7. Instead, I discovered I could get a week's worth of Weight Watchers (WTW) microwave entrées, two bags of frozen mixed vegetables, and a half-dozen bottles of generic seltzer and cut my cost to about $4 a day.
Sharing a newsroom coffeemaker with a half dozen other caffeine addicts brought my habit down from as much as $3.50 a day to the price of a can of coffee once a month. It added up to savings of $50 a month on coffee alone, and even more if I watched for sales.
Now, with things like accessing cash, packing your lunch, and sundry spending, you're going to have good weeks and bad weeks, so if you're working late and run out of time to shop and pack lunch, don't beat yourself up. Look at where you went wrong and adjust. It's easier to be disciplined with these kinds of ongoing saving strategies if you set up a system, such as getting all your cash on payday, and sitting down to plan out your lunch menus at a set time each week. If nothing else, grab a pack of hot dogs and buns, a few cans of soup, and you can microwave a decent, inexpensive lunch with nearly no thought at all.
Beyond bank fees and lunch, who knows how you or anyone else will manage to cut back when it comes to personal discretionary spending. Lord knows that I don't want to know what Mrs. Funny Money spends her personal cash on and how she cut back, and I'd certainly be embarrassed to have her know how stupidly I spent my cash in the past.
That saved $104 a month, with nary a marital squabble, thanks to the cooperative and understanding Mrs. Funny Money. Ideally, our new all-cash approach will allow us to find ways to trim without cutting out the things that are important to each of us.
"After all," said Mrs. Funny Money, batting her eyelashes, "new makeup and nice clothes make me feel romantic."
"Oh, sweetie," I said, handing her a martini, "that's what the gin's for."
Here's the running total for the whole series so far:
- Week 1 - Miscellaneous Spending: $132.89
- Week 2 - Utilities and Phones: $139.39
- Week 3 - Transportation Costs: $41.61
- Week 4 - Kid Costs: $114.50
- Week 5 - Work Costs: $90
- Week 6 - Personal Spending: $104
- Total Monthly Savings: $622.39
Read them in any order you want -- just get in there and start saving! Check out the series introduction to get the big picture on finding big savings in your family budget. You can check here on DailyFinance.com, follow me on Twitter, or go like The $1,000 Challenge Facebook page to get a heads up whenever a new installment comes online.
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