It's the Little Things
I’ve had many people in my office come in and tell me that they don’t have any money to save (which begs the question as to why they are in my office in the first place). When I ask them to show me their budget, they don’t have one. When I send them out with homework to come up with a listing of their income and expenses, they can usually tell me where 100% of their income is coming from, but they usually can only track between 50-70% of their expenses. Likely somewhere in the gaping hole is the money they could be saving.
Often I find small changes in your habits can create a good amount of money you can invest. Let’s take my hypothetical couple, Fred & Wilma (Wilma’s the smart one). Both work, Fred at a quarry and Wilma at a law office.
Not stopping for breakfast before she leaves the house, Wilma does stop at Starbucks and gets a Venti Caramel Macchiato (my favorite—light on the pumps, please) on her way to work. She wants to look her best, so she gets a pedicure and manicure once a week. Wilma has been trying to quit smoking for years, but with her high stress job, she still lights up a pack a day.
Fred likes to eat. Wilma doesn’t have time for her own breakfast, much less making Fred’s lunch, so he is on his own. He “forgets” a couple of times a week and “has” to go out to lunch with the gang.
Wilma loves Fred (we’re not sure why) and Fred just adores Wilma. Their daughter is married with kids of her own, so now they can spend time together. They golf each weekend, go to the movies every Tuesday night, and have a pizza delivered on Friday when they stay in and snuggle up to shows they recorded during the week.
Unfortunately, they, as is common with most Americans, never got serious with their savings. They both have IRA and 401k plans at work, but are spotty in contributing to the IRA and only do the minimum that’s matched in their 401k. Well, we can help fix that.
No, I don’t want to eliminate all the little things they do for themselves that make life pleasant. But what if we could cut all of the above in half? They could golf every other week, Wilma could cut back on her smoking (which could save on health costs in the long run), and Fred could still go out with the gang, just less often. According to research my staff did, cutting back half on these little extras would save between $7000 and $8000 each year. For most people, “finding” an extra $7000 would make a big difference in their lives.
Looking for money to save? Try looking at the little things.
This article was published in the Wichita Falls Times Record News on November 20, 2011.
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