Because the Living with Less project has been so prevalent in our home in recently weeks, a great deal of conversation has centered on the concept of buying better but buying less. It's not a groundbreaking idea, but when you're out of practice, such discipline can feel like an earthquake is shaking your impromptu-spending freedoms.
Tips for Creating a 'Buy Better, Buy Less' Budget:
- Set a Goal: Do you know the item you want to purchase? How much money does it cost? When do you want to buy it? Knowing these two pieces of information helps you work backwards into the savings process. You now have an amount and a timeframe, so figure out how much you want to save each month.
- Be Realistic: Consider whether your goal is realistic. If saving for that handmade dining room table in three months time limits your budget so much that you're eating ramen every night for dinner, maybe reconsider your timeframe. Anticipating its arrival for July instead of May might be a better fit.
- Control Your Spending: Think twice before you spring for that coffee or expensive cocktail. Phantom spending is one of the biggest challenges to living on a budget: take all of those "little" expenses you incur in a month (yes, include everything, even that afternoon coffee) and figure out which were unplanned or unconsciously made. Those are your phantom expenses and they add-up. Once you see a list of your phantom expenses, you'll better understand how to control them. Another tip: If you're out shopping and see an item you love, ask yourself...do you love it more than that adored object you already own, the one serving the same purpose? If no, walk away. If yes, determine whether you need it now or if it can wait.
- Trial Period: Try working within this new budget for a month. How does it feel? Could you have saved more? Or are you frustrated that you didn't see those four movies last month? This is the time to tweak your timeframe.
- Keeping Track: When looking at your bank balance, it's important to know what money is savings and what is for monthly expenses. If you don't have a savings account to funnel your pinched pennies into, then keep a spreadsheet. Regularly update the data and stay on top of it!
- Planning Your Purchase: Think about the big purchase day. How will you pay for the item? If you have a credit card with a great reward program (points, etc.), use that for the purchase, then pay off the balance when it's due. If you don't have a rewards program that actually benefits you, get one! Make the most of your savings and purchases, stretch them! With the points you rack-up from your better purchases, you can save money in other ways: claim your rewards as Home Depot gift cards, for example.
Other suggestions? Questions or comments? Let us know!
(Image: Landis Carey)