Seemingly ordinary everyday purchases can add up quickly and may be the answer to “where did the money go”. Marshall Loeb identified six budget breakers:
- Bottled water
- Lunch out
- Abandoned gym memberships.
Loeb calculated the annual cost of these indulgences from $350 (coffee) to alcohol ($2920). Taken together, giving up or cutting down on any one of these items could provide a real start to a saving account or retirement savings.
As appealing as lists that focus on little things are, I think the sounder approach is that taken by Harvard Law Professor Elizabeth Warren in her book What Your Worth. She started with the biggest monthly expenses, such as housing and transportation, and looked for ways to get a family’s expenses into line.
Warren recognized, as well, that a person or a family needs to have some money which they are free to spend on whatever tickles their fancy, and that a successful budget needs to provide for some spending that isn’t categorized. I spend a lot of time with family budgets and I found Warren to be sound both financially and psychologically. Check out her book at the library: it won’t cost you.