Despite working in the field of finance and devoting my career to helping others fix mistakes and plan for successful retirements, I can make some silly mistakes from time to time. In my house, my wife is the thriftier of the two of us, while I tend to be the one to make more impulsive and higher dollar purchases. I am the one that handles our monthly budget and pays the bills, but she is often the one with keen insights into things I may overlook at the time. We both took a look at our own budget over the past year, and we found an extra $5,000 in our budget for this year by making some (very easy) adjustments.
Eating in a Pandemic
The USDA published a study in 2019 (pre-pandemic) that a moderate cost budget for a household of two on groceries was around $650 per month, which is right where my family of two ended up last year. For a family of four, that bill went up to just under $1,000 every month. However, eating takeout, DoorDashing, and dining at restaurants went up last year, as we slowly started to return to a relative “normalcy.” When we looked at our spending on groceries, we found that we still spent the same amount regardless of how much we ate out that month. I’m guessing that that extra food we bought at the grocery store ended up getting thrown out! We ended up averaging another $750 per month on eating out, which added up to an extra $7,500 in spending per year! Our adjustment for this year: cutting our eating out to $250/month and adjusting our grocery bill to $750/month. This saved us $400 a month.
Total Savings on Food in 2022: $4,800
We live in an age of cord cutting. While there are local cable services and satellite TV services that are still very popular, the business models they use are being challenged by streaming services now offered by a variety of major networks. Netflix, YouTube, Hulu, Disney, Apple, Paramount, Peacock, HBO are just some of the huge names that offer streaming content. My wife and I were subscribers to DirecTV, and we got tired of the yearly hassle of calling them to cancel our service, only to be offered a 1 year contract at a lower rate that was still higher than their initial signup offer. We ended up spending $100 a month on DirecTV, and a few years ago, made the switch to go completely streaming when YouTube TV launched at $39.99/month. Now, at the end of 2021, we still subscribe to YouTube TV, now at $64.99/month, along with 6 or 7 of those other services (because we have series that we watch on each!) Last year, we ended up spending about $250/month on all of our TV and music streaming services! What is worse is that each of these subscriptions are auto-renewing, which means that even after we were done watching them, we never unsubscribed! This year, I have a list of the services we use, and when shows are on we want to see, we can choose to subscribe for that time only, and then cancel the subscription. We review our list each month and talk about what we watch on each and if we haven’t logged into a service that month, we cancel it! This should end up saving us another $150/month.
Total Savings on Home Entertainment: $1,800
These two adjustments will save my household about $6,500-7,000 a year on average. What could we choose to do with the money? We could pay for a pretty nice vacation for the two of us (we haven’t been away on vacation together just the two of us since our honeymoon 3 years ago!). We could make the full contribution to one of our retirement accounts of $6,000. We could establish a “car reserve” for me, as I know I’m going to need to get a new vehicle sometime in the next two years. There are lots of things that my family could do with that kind of extra money. I’m willing to bet that if you looked at your own budgets, particularly these two areas, you could find plenty of extra money to use toward those things most important to you as well!
Thanks for taking the time to read the blog this week! I would love the opportunity to sit down and discuss how I can help you improve your financial picture and reach your goals. I specialize in creating focused, interactive plans for clients building wealth for retirement as well as managing those retirement plans to make sure my clients enjoy their retirement years to the fullest. I also work with a variety of other financial issues! If you would like to schedule a free consultation, please call the office at the number below, or click the link to schedule a virtual or in-person meeting (or phone call) by setting a time that works for you! I would love to hear from you! Enjoy the rest of your week!
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