Christian Financial Advice and Biblical Stewardship

Miscellaneous savings can create $70,000

  • 2003 20 Jun
Miscellaneous savings can create $70,000
Reprinted with permission from No-Debt Living Newsletter, copyright 2000 No-Debt Living. Written by Robert Frank, the editor of No-Debt Living Newsletter which provides financial and time-management news with a Christian perspective.

When it comes to budgets, the "miscellaneous" category is the junk drawer of home finance. A catch-all label that allows us to be a little more flexible, versatile, responsive, creative ... and sloppy. At work it's a ticket to the vending machine, luncheons, lattes and a mixed bag of other items.

Let's face it, life's too short, we need to make work as fun as possible and enjoy the fruits of our labor (Ecclesiastes 2:24-25 and 3:13). But, if you don't watch out, those little miscellaneous costs can sneak up and take a big bite out of your budget.

"Most people don't know what they're spending in this category," said Tom Krushensky, owner of First Advisors Inc. "I've seen the spending range from $100 to $400 per month, depending upon the person's income. The higher the income level of the person, the higher the miscellaneous spending level will be and the less conscious that person will be of where the money's going. It can really balloon."

Consider the following scenario: You have two children and both you and your spouse work. In an average month, you (not your spouse) buy the following items:
  • Three lattes or espressos per week. Cost: $2 each or $24/month.

  • Two lunches per week at a restaurant. Cost $5 each or $40/month.

  • Candy, beverages and other items from the vending machine. Cost: $2/week or $8/month.

  • One fast-food dinner a week for your family. Cost: $15 per week or $60/month.
Total cost: $132 per month.

You haven't done anything extravagant. These are minor, unplanned expenditures. This list doesn't even address such items as movies, planned dining at a nicer restaurant, etc. But, multiply your $132 per month cost by 12 and you're looking at $1,584 per year. If you're married, we're talking $2,448 per year (assuming the $60 for fast-food dinners holds constant).

Do the figures in this example sounds too high? They're not. In fact, they're usually too low. People who have no budget tend to spend substantially more than this on miscellaneous items ... as much as 100% more.
Now, imagine this:

If the hypothetical family described above could cut its miscellaneous spending in half and put the $1,224 per year savings into an IRA mutual fund account that yields 10% annual earnings, it would be worth $70,105 in 20 years, Krushensky said.

Here are six simple ways you can reduce your miscellaneous costs:
  • Make a list and determine how much you currently spend on miscellaneous items. Krushensky suggests getting a little pocket-sized notebook and keeping a diary for about two weeks to a month. Once you know that figure, budget an amount you're willing to spend and hold yourself to it. Try it for a month or two, then readjust if necessary.

  • Take your lunch more often. Get creative and make it fun.

  • If you need to meet someone for lunch, ask them if they'd like to "brown bag it." Your time will probably be more rewarding and productive.

  • Buy snacks at the grocery store and take them to work, instead of buying them from a vending machine. The variety and quality are better, and you can cut your costs in half.

  • Next time you make a soup or casserole, double or triple the recipe and freeze it. Then, when your schedule gets crazy and you need a quick dinner, you can just pop something in the microwave and still have a home-cooked dinner.

  • Be prepared for days when you wake up late and don't have the time to make a lunch for work. Stash a couple cans of soup or other non-perishable items in your desk. You can also use them when a luncheon date falls through.

  • If you're goal is to maximize your resources and get debt free, force yourself to take look at your miscellaneous spending. Like the family junk drawer, it needs to be cleaned out every so often.

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