I recently came across a story about a rich Australian dude lamenting that the reason why millennials have been slow to buy homes is because they spend all their money on avocado toast and expensive coffee. And while I agree with the concept of ‘saving more by spending less’ (duh?), telling millennials like myself (I guess technically I’m a Xennial?), to stop spending money is as effective as abstinence as a method of teenage birth control – great in theory but easier said than done in practice…
I offer a more realistic take on money management that has worked well for me. Instead of trying to go cold turkey and forgoing your daily coffee habit…
1.) First, estimate how much you think you spend, on average, eating out in a month (don’t include what you spend on groceries, just at restaurants, bars, fast food, Starbucks, etc).
2.) Next, track exactly how much you spend eating out for the month of August – not approximately or roughly but down to the penny (again, don’t include groceries, just what you spend at restaurants, bars, fast food, Starbucks, etc). I know this might seem like a pretty daunting task but it’s easier than it sounds by using web-based finance s/w like Mint to automatically aggregate your transactions by connecting your credit card(s).
3.) Finally, compare your initial estimate with your exact spend amount. Just about everyone I know who I’ve done this with has been surprised/shocked by how far off perception was to reality so share your initial estimate in the comments!
While knowing how much you spend on food and drink in a month won’t magically add zeros to your checking account, awareness is a big first step towards helping you gain (or regain) control of your finances and enable you to make progress towards buying your first house (or other financial goals).
Note: I spent exactly $424.26 in July on a $450/mo budget (but still running $22 over from June). Here’s a screenshot of my current status as of Aug 1. I’ll do a deeper dive into my Budget next week!