What went before this:
Knowing your money
In a credit society, where you can spend today and not think about it until 30 days later when the bill shows up, it’s hard to keep track of your spending. If you’re like most people, pay goes into the bank and bills come out of the bank and there’s no real awareness of the actual dollars and cents going in and out. I equate it to constantly eating while you’re distracted. You’re not really paying attention to the consumption until your pants don’t fit then you’re like, “Whoa! How’d that happen?” You have to know what things cost, so you will know if you’re spending too much or if it’s worth it or, most importantly, if you can actually afford it.
When my old car, which only cost me gas to drive since it was paid off in full, started acting up, I panicked because I need a car, but how could I possibly afford a new one? With the price of gas, our hunka junka cost $65-$70 for a full tank and I could get 300 kms on a full tank. In a month, I used approximately 350 kms for my commute to work, I probably used another 60 for swimming lessons, maybe 90 for my trips downtown for dancing and let’s add another 150 for miscellaneous trips. Throw in the fact that the car’s fuel consumption is sub par, I was filling my tank about 3 times a month – more if I went out of town and even more if I used the air conditioning. That totalled about $200. Until I had to evaluate it, I didn’t really know how much I was spending on gas. I just knew that I didn’t have a car payment and I didn’t have to pay for transit, so it was all good – I was ahead.
It turns out, because I was spending a crazy amount on gas and I could get a car for around the same price as what I was spending on gas. I couldn’t believe it. I could have a car payment and pay $40 for a full tank of gas on a car with GREAT fuel consumption and break even. That’s the thing, I didn’t know. You have to know what you spend to know how you can do better. Maybe you could be better off with just a small change.
Eating out is another one. How much do you spend on eating out? Lunch out a few days a week, drinks with the girls, quick bites here and there. They add up. If you spend $300 a month on eating out, for example, and you spend $200 on groceries – that doesn’t make sense somehow, right, because are you really eating $500 worth of food? Probably not. Eating out is expensive if not done correctly and chucking out dead veggies every week is not fun, a waste of food and it’s depressing.
Perhaps a solution is to budget the cost of eating out into your spending. When Kidlet is not with me, I rarely cook. Why bother? I’ve learned that for those weeks, I buy the bare minimum – think bread and cheese and milk and some fruit. That way, I can eat out guilt free. I used to (but now don’t) have lofty meal plans for when he was away, so I’d go out and get a bunch of groceries. In reality, I was out all the time socializing, coming home late at night and only used the stove to boil water for tea. Now, I use that same grocery money to eat out. I also make sure if I do eat out, I order food that can be eaten in two meals, which makes my money stretch even more!
You have to know what spend to know if it’s too much. To end with a cliche that just happens to apply in this situation: “Knowledge is power!”
Next: Spreading big payments over time