Layout:
Home > Spending Less

Spending Less

October 12th, 2011 at 01:08 am

Hi, everyone.

I have heard over and over again that one of the keys to financial success is spending less than what you earn. My logical mind knows this fact inside and out. Recently, I met with the retirement planning counselor for my plan. He asked a lot of questions about my finances in general (amount in savings, insurance, budget, etc.). When I told him that for my regular savings account, I had only around $750 in it, he gently said that I need at least 6 months of expenses in savings. I actually had a copy of my budget in my hand and know that it takes approximately $2000 to meet all normal bills. He said, "Well then you need $12,000 minimum in savings." Like I said, my logical brain knows this, but it really helped to get my butt in gear by hearing it from a financial planning counselor. Since then, I have been really watching my spending by taking out $20.00 cash for snacks and stuff. I pretty well stick to my guns and don't really spend outside that, allowing me to set aside a little extra for savings. I have also been putting my "found money" from surveys and rebates into the car account. $12,000. Wow. Well, I will get there somehow. I will break $1000 in my main savings account on Friday. I have also been adding to the house account, which we are planning to use for buying new windows for the house. Woo-Hoo!

3 Responses to “Spending Less”

  1. creditcardfree Says:
    1318379381

    Personally, I'd get a larger emergency fund before I bought new windows for a house. Good luck!!

  2. ceejay74 Says:
    1318436945

    I find calculating an emergency fund kind of complicated. For example, there are lots of "normal" bills that I could get rid of if a true emergency hit, whereas other expenses would crop up (transportation, health care) if I were unemployed.

    I finally decided to calculate the bare-bones expenses of a worst-case scenario -- no income of any kind coming in, no healthcare coverage -- and try to save to that. I have about 3 months' worth of that, but I think it would last me more like 6 months, because a scenario where there's no income or health coverage of any kind (would require 3 people to lose their jobs and not receive unemployment) seems highly unlikely.

  3. Jerry Says:
    1320175396

    It really does lead to a sobering realization when the true numbers are kicked around... and while there are lots of ways to define a sufficient EF, the simple fact is that the total will not be pocket change! Still, there is some comfort in ceejay74's situation, in that income and health insurance for a household with multiple wage earners does offset some of the risk.
    Jerry

Leave a Reply

(Note: If you were logged in, we could automatically fill in these fields for you.)
*
Will not be published.
   

* Please spell out the number 4.  [ Why? ]

vB Code: You can use these tags: [b] [i] [u] [url] [email]