For us a mildly anal spreadsheet for one month worked magic. I updated it every evening with every penny spent that day and was horrified at the groceries/coffees/taxi fares. Now my grocery bill is a third what it was, still eating well but only shopping once a week. No bought coffee at all and every time I think about a taxi when I have a valid travel pass the memory of the embarrassment at all my hard earned cash disappearing into thin air stops me dead.

All the money saved goes to the things I always thought we couldn't afford - new appliances and expensive paint. If there's anything I fancy I just buy it. Not really saving anything more but spending differently is making life much happier.

saraih, an Excel spreadsheet works for me as well. I do NOT use cash... I lose track of bills and coins, and therefore lose money! I use a debit card everywhere I can, update my spreadsheet daily, and stay under budget. Going "Old School" for me leads to disaster.

I've been taking peanut butter and jelly sandwiches to work every day for 7 years and am quite proud of the thousands of dollars I've saved so far.

I really didn't know you had to be "taught" how to make a realistic budget. Either you know how much you want to save every month or you don't. Everything in between is a matter of priority.

Another tip: Call all of your utilities and ask for a better rate or advice on how to lower your bill. I've gotten my cell phone, cable and DirecTV bills lowered just by calling and asking. I switched my electrical generator and saved 1 cent per kwh (doesn't work in all states), plus they sent me a big box full of low wattage light bulbs!

I agree with not being too tight, personally I give myself $100 a month as "fun money" to do whatever I want with.

going old school doesn't work for me either. i feel that having cash in my wallet makes me more inclined to spend it. using a debit card makes me spend less, with the benefit of seeing where my money goes.

My BF and I actually avoid an absurdly large cable bill by ONLY using Netflix and Hulu (free). But yeah, do what makes sense to you.

We used mint.com which REALLY helped us with bills - and we each got a cash allowance for all eating out and "play" stuff.

Then we became a one income household and went to cash only. We got $150 a week in groceries which meant meal planning, sunday shopping, and eating leftovers. Our "fun" spending was $20 per month each. Amazingly this really worked for us. Now that my husband has a job we went right back to excess, so we have to get back on a cash only system for us.

I agree with past comments - the "cash" system has never worked for me. If it's there - I will spend it, no doubt!

My husband is an accountant and has showed me the light :) we use our credit card for everything... EVERYTHING - we also watch the online statement like hawks. At the end of each year we get 3-5% cash back and our CC provider issues automatic one year warranties on all large purchases (for example we got an extra warranty from the CC provider on our Mac desktop we just purchased. Saweet!)

The key to success is prompt payoff at the end of each month. Never spend more than you have. We are debt free and make money off each purchase. Woot Woot.

Incidentally, with the CC system - obviously your credit score goes through the roof. We just got our brand new car and got thousands taken off the price because both of us had such high credit scores. It works out so well in the end if you can handle CCs

These are all good ways to save a couple bucks, and they do add up, but giving up Starbucks isn't going to change your life-long financial security. You need to put those savings somewhere, and knowing what kind of cash you want on hand when you retire and how to diversify your investments is what's going to make the real difference. Everyone can afford to save for retirement and invest.

Dave Ramsey worked wonders for us. It requires discipline and, as he says, "Adults devise and plan and stick with it. Children do what feels good."

@jess13, I definitely needed to be taught to make a budget. My parents never taught me anything about handling money, except seeing my mom spend like there was no end to it.
So when I became an adult and responsible for my own bills, I overspent constantly. Its taken years to break that cycle, and I'm still fighting it now.

Budgeting definitely needs to be learned, or taught, preferably before you're 18.

Debit cards and an Excel spreadsheet work really well for us.

I like how this article talks about both the big AND small areas of spending; and I think it's important to look at both.

Our rent is low; probably $300 less than most places around here are. That makes a huge difference; but it's the kind of thing that's difficult to change very often.

Groceries are an easy area to have "margin" in but cut back when you need; and I'm always amazed by how cutting down the frequency of shopping trips cuts down on the amount of items bought.

The biggest grocery tip I have is freezing meat on sale. In Canada, we don't get great sales on meat; but occasionally we get ground beef, sirloin roast, or chicken breast on sale for $2/lb. So we buy a LOT of it; then cut sirloin roasts into steaks or stir-fry strips or divide it up otherwise into half-pound portions (2x1/4 lb portions) and freeze tons of it in zippered sandwich bags. (Adding marinade to chicken or beef helps avoid freezer burn). We flatten the ground beef to make square, stackable freezer bags of ground beef; as a bonus; you can tear the bag off, put it on a plate and defrost it quickly that way.

And yes, when I have a chest freezer, I'd love to buy a grass-fed half-cow from the local butcher, but that's not practical in our current space.

I have heard of a bank (Wells Fargo) which automatically transfers $1 for each debit transaction made including online bills from your checking to your savings account. We had about 140 debit/online transactions last month...over a year that would add up to over $1,600! If you need to transfer your money back to checking at any time you may but this way you are automatically saving your own money. Before debit cards my husband and I used to go on road trips with the boat load of change that we had. Now, we don't even have change around to give the kids for ice cream. So, by having a debit account that forces you to save, that would really replace the piggy bank. Our bank doesn't do that but I wish they would...we're thinking of changing....

I lose track of cash bills too. If I have cash it's as good as gone. I'm much better at controlling my spending with my debit card.

HannahM, I'm the accountant in our family and my DH could have written your post word for word. We operate on exactly the same system. We both have a cash 'allowance' but it's small and not something I track.

The biggest key for me is to track where you've been. Once you really know where the money is really going, it's a lot easier to create a realistic budget. Once you've done that budget. try to revisit it every couple months for possible adjustments within the categories. Doing a budget check daily or weekly always starts out well -- until the novelty wears off and 6 months later you wonder where the problems are!

I use a daily spending tracker (upgraded from paper to Excel this year). At the end of each month, I tally each category, and can easily see where every penny is spent. This system helped me realize I spent too much time shopping. I cut that back, and was able to save up for a new car.

In my spreadsheet, I have fixed expenses (rent, insurance, etc), variable expenses (groceries, entertainment), debt repayments, and savings sections.

I don't spend in cash either - too hard to track. At the end of the day/week I make sure to record all my spending in my spreadsheet by checking my online banking. This way I can also see mid-month how I'm doing. If I'm getting close to my max budget in one category, I can adjust my behaviour.

Has anyone here ever read the book "The Richest Man in Babylon" by George Clason? It's a great book that gives alot of people tips on saving money as well as managing it for a profitable income and putting them into short stories. I found it quite informative. It was hard to read if you're not used to the 'thyn' and 'thou' language but you get used to it.

I also LOVE mint.com especially since I work 100% freelance so for me being able to TAG items as write offs within Mint's site is awesome.

I just started clipping coupons maybe 2 months ago. My friend got me a subscription to a magazine called ALL YOU. And yes, it's pretty cheesy, but it's full of coupons! And a lot of them are GREAT coupons and don't expire for longer than the ones you find in the newspaper.

And yes, I sit on a Sunday and clip coupons but relax doing it! I clip coupons, drink some coffee, and listen to some music. Has saved me a TON thus far. And I don't care if I look like a crazy lady from Extreme Couponing, with my little folder and coupons. I save a ton!!

Also I sign up with e-rewards. Which you take online surveys and get points, then those turn into gift cards. I've been a member for YEARS and have earned many Macy's gift cards or I trade them for Delta Sky Miles. Once I actually was asked to participate in a focus group, where I was paid $150 for an hour! Good deal!

Mint is honestly so safe, even Kevin Rose from Digg.com uses it!! Don't be afraid of giving them your account information! IT IS THE BEST! It texts me when my account is low, it texts me when I have a large deposit, etc. and the budgeting is amazing.

If I do a credit card it is for sure American Express green card. The pts. are great and you pay it off every single month. It's a charge card not a credit card.

The MOST important thing is to get your budget down on paper (or excel sheet or chalkboard or whatever) -- then see how your receipts compare to what you think you spend.

I keep a big coffee mug on my landing strip (thanks AT!) for all the little receipts and sort them out once a week. Works great for us, we've been able to put aside an 8-month emergency fund in a separate account!

I'm pretty sure mint saved my marriage. :-)

If you mainly use debit or credit cards for you spending, Mint is a no brainer. It captures your transactions from your bank and credit cards and puts them into categories.

There are apps for iOS and Android that enable you to keep an eye on your spending at all times.

Building a budget is easy based on previous spending giving you a great starting point to work with. Also, I like that you can roll a budget over from month to month. So, over spend on a category in a month, it will take the over spend out of the current month. Or, give you more money if you underspend.

No, I'm not employed by Mint, just really love how it keeps me on track with minimal effort on my part.

Great post! A couple things I've done lately are:
* learn how to launder my "dry-clean-only" fabrics at home and I've stopped buying anything that takes that much time to care for (because I value my time as much as I do the dollars - I'd rather be writing or painting than caring for laundry!).
* buy coupons for your favorite products (only) from a clipping service. I say (only) because why spend time collecting coupons for things you don't want or need? This way you won't spent any time coupon clipping, you'll get only the coupons you really want, and someone else is receiving income by doing the work clipping. I look specifically for 'free product' coupons so recently I was able to stock up on all the laundry/cleaning/toiletries I'll need for 1-1/2 to 2 years for the price of what I would have spent retail for just 2 months worth. I have a small area in my garage, where everything's stored, and what wouldn't fit in that storage space went to my local food bank or shelter.

BTW, I should add, going lacto-ovo-vegetarian and gardening to produce more of my own food - while not done for financial reasons - have had a major impact financially. I'm also preserving everything from the garden (herbs, spices, vegetables, fruits, citrus), and pass quite a bit on to my local food kitchen, but I'm making those little 'specialty' foods myself at home rather than plopping down $5 for each jar of fancy condiment that previously caught my eye at the market.

On using cash: We're not talking paying your rent with hundred-dollar bills. But know how much you have fore each budget item and spend *only* that much or less. The idea with cash is that, once you run out of it, it's gone. You don't then move on to your credit card and your husband's credit card and a bank loan. That's a recipe for disaster.

My story: I figured out at 28 that two of my four credit cards were charging me late fees every month even though I paid on the same day every month. They move your due dates around on you. A budget *is* something you have to be taught to use. If you think you can get by just "knowing" how much you can spend you are lying to yourself and when you're 65 you'll be kicking yourself. If you don't manage your own money, someone else will be more than happy to take control of it instead...and not in a good way.

When I first bought my house I set up a spreadsheet (yes, admittedly a bit anal) to track my expenses and plan for a major renovation. The tracking was incredibly helpful in understanding my expenses and how much was left over. (I wish I'd started that beforehand so I would have saved a lot more and spent a lot less on eating out.) It really helps to know how cutting out the "small" stuff adds up when you have some serious goals in mind -- like saving "x" amount in the next one, two, or three years for a down payment or pay down your mortgage faster, renovate, etc.

As others have said, I avoid cash as I find it hard to track. I need it at the farmer's market so I only take out what I need for that. Too much cash on hand and I am prone to spend it on unplanned fun food. :-)

Mint is great for tracking spending habits. I am also pretty fond of the online banking tools offered by BofA. I can do all of my bills electronically, and it makes planning and keeping track so much easier. Also, I think you just have to automate saving. Auto-transfer that money into a savings account and pretend like it was never there in the first place!

I don't enjoy watching my money like a hawk, it really drags me down. Fortunately, my spouse is diligent and does a lot to keep us on track. One thing I have found that helps me is to make budget planning not only about how to save money but also about making plans on how to spend money. I think of something big that I want to do and I plan those costs at the same time as I am planning the little sacrifices that make those costs possible. This really helps me out, psychologically.

Great conversation here with wonderfully helpful tips. Thanx all!

Here's one... if you can't afford it without it (and it's not an emergency) don't put it on your credit card.

It takes approximately 88 years to pay off $1000 by paying the minimum $10.00/month. That thousand dollars? In reality will turn into $10 560 at the end of those 88 years. It's not really a bargain at that point-- is it?

When we needed to be on a budget we ran a strict spreadsheet, placed things into categories and did things like only buy home brands, not eat out, not spend money on alcohol, not get hair cuts, not eat meat, etc.

We also worked on cash for everything bar rent, fruit/veg (csa subscription), electricity, insurance and car registration. We'd take $100/week out for everything else (groceries, coffee, public transport, education expenses, petrol, etc) and anything left over went into a jar. After 6 months we had enough money in the jar to pay for flights down south for a holiday and were ahead enough in our savings that we could go on a holiday without feeling guilty.

Now that we don't need to be on a budget it is kind of nice to relax and enjoy life a little more without writing down every expense. Once you've done it for a prolonged period of time though some of the habits stick and I'm probably still pretty tight when it comes to some things.

Quicken has helped us significantly. We do not pay any bills online or anything, but it helps us track epenses, reconcile bank statements, and reminds us to pay bills. It's great.....my husband is really not a financial person, but he likes it too. Once a week we input all our receipts and once a month we reconcile with our bank statements (old school but we dont want to connect the quicken to our online banking accounts since we are paranoid). Everything has a category so we can track our monthly spending on a pie chart...and it reminds you to pay your bills on time. Another tip is that we don't believe in credit cards...just student loans...lol :c)

Dave Ramsey's budgeting plan has helped us tremendously. There's nothing I want bad enough to go into debt for ever again.

I buy the 'portable cardboardy like the coffee shops' coffee cups, and pour in my super hot coffee and take with me, I feel like i've purchased from a Starbucks or so without the paying for it, when I'm running errands or going visiting. It keeps me from popping into a coffee shop as a 'relaxing treat' when I come across one. Small steps to not 'throwing my fiver away'. Also a good snack bar..

Keeks, why not a keep cup or similar so that you are not always throwing away the cardboard ones. They keep coffee hot for longer and you only have to buy them once. All pluses in my book.

Elizabeth Warren's book, "All Your Worth." Is amazing. Everything is so simple. You spend 50% of your money on must-haves- housing, insurance, food and other bills that you have to pay. You keep 30% of you money to spend on anything you want (so much fun and you give yourself a cash allowance- it can be a debit card if you hate cash). You put 20% into savings and to pay off old debts (i.e credit cards). It is a lot like the Total Money Makeover but takes longer to pay off the debt but involves no suffering. I've doing it for six months and haven't worried about money since I started.

Both my husband and I take a $20.00 bill as our spending money, once a week. That's IT. Groceries, other essentials are paid using a credit card that pays you back quarterly. All these tips, plus cooking at home, the Old fashioned way (lots of soups, stews, bean dishes, no meat) reeeeally help. It's a tough world out there, and I'm soooo sorry for all the younger generation that was never taught how to cook, or stretch those dollars. OUCH.

If I have cash, I'll spend less at once, but more if I have it. If I use a debit card, I'll spend less frequently, but more at a time. So if I have just cash, I'm really frugal at the grocery store, but I'm also more likely to splurge at the thrift store or the bookstore. If I use my debit card, I'll spent more on groceries, but skip the other shopping.

I'm curious about Mint.com, but hesitant. Anyone ever have any problems with it?

alicee, the whole time I was writing my note..I was cringing, knowing the best way all around is to use the one time buy of a thermos type portable mug..I just hate the taste of the plastic...mixed with the coffee i get...I used to reuse my cardboard cups for as long as I could from the coffee shops..and I try to do the same with these purchased ones..pouring hot coffee from mug into cardboard one..If there is a non plasticy tasting travel mug..I would def buy it if you know of any? Thanks for input.. : ) always needed!

@KEEKS: have you tried the porcelain version with the silicone lid? They don't taste like plastic - I'm sensitive to that plastic taste too. I got mine from One Kings Lane, mine's brightly colored - turquoise with polka dots, you might give that type a try:
http://tinyurl.com/7qmjgvr

@Keeks - what about a stainless steel mug? I have one for coffee and one for tea that I use all the time and they have lasted for years. The coffee one is 12 years old now and still going strong. Plus stainless steel keeps the drinks hot much longer than plastic/ cardboard.

@Keeks and Rucy: I bought a porcelain mug with the silicone lid but it leaks. Not sure that silicone is all that safe to drink hot liquids through. I'll try the stainless steel mug.

HannahM- When you say that you pay your CC off right away, do you pay it that night or before the due date or at the due date of your statement? We are getting ready to do a re-fi and need a dryer...I'm thinking that it would be great to charge it but only with the cash ready to pay it off. I'm just wondering when the best time is to pay the CC off? If I pay it that night, say...does it go on the Credit Report? Thanks! :)

PS HannahM- I read that you suggest prompt payment at the end of the month-do you mean end of the statement? Thanks a bunch!

My mother gave me the book All Your Worth (http://www.amazon.com/All-Your-Worth-Ultimate-Lifetime/dp/074326987X) and it actually helped me think through how to break my money into needs, wants, and saving for later.

@ donnamarie : I am a part of the "younger generation" and I make my own bread and soup/stew/chili (whatever sounds good at the time) from scratch weekly. I also have a budget and stick to it every month. I resent that people generalize my age group like that. Most of the people I spend my time with are quite frugal and creative in budgeting as well.

Rucy,Merm and Judithesl, thank you for your ideas! I love the sound of the polka dot mug with the non plasticy silicone..but wonder about the hot liquid now..i am going to look for 'stainless steel' and see what they have to offer! Good ideas..and see about the silicone/hot liquid 'mix'..

RE: avoiding credit card debt:

I spend on a credit card, and I pay it off every WEEK, in full. That way, if I'm busy or miss a week, I can be sure it'll still get done and no fees will accrue.

It also shows me VERY QUICKLY if I'm heading toward over-budget! If I don't have enough on hand (i.e., in checking, not drawing from savings) to pay in full right then, it's time to tighten the belt for the coming week and get back on track.