Financially, I’m all about sweating the small stuff. Even though I don’t like the word “frugal,” if you followed me around for a week you might describe me that way. I bring my lunch to work almost every day, reuse plastic bags, and almost always order water in restaurants.
However, I’m also all about sweating the big stuff, and if you really want to get the money thing right, this is where you’ll get the most bang for your buck. In particular, if you’re going to live generously, save and invest adequately, and experience that wonder of the financial world known as margin, you really have to get your housing, transportation, and food expenses right. Here are some guidelines and suggestions.
Where to live
The absolute max you should spend on housing (mortgage, property tax, and homeowner’s insurance) is 25% of monthly gross income. Far better to keep it to 20%. And especially for those who are newly married, keeping your housing costs to 20-25% of just one income will get the financial side of your marriage off to an amazing start.
I know some people live in really expensive parts of the country where keeping housing costs to 25% of monthly gross income seems like a stretch. So, you either need a really big income in order to make it work if you want to live there or you’ll have to work really hard to keep your discretionary spending (entertainment, clothing, vacations, etc.) under control. I don’t see generosity or saving and investing as options for cutting back.
What to drive
After teaching a recent money & marriage workshop at our church, a couple came up to me to ask for some budgeting suggestions. They were doing a ton of things right, and yet it was a struggle for them to makes ends meet.
We went category by category, and soon enough we found the culprit: a financed car. For most financial mortals, a car payment simply doesn’t fit on a budget. If you’re going to experience financial freedom, you need to free yourself of a car payment. That may take some time, but it’s a goal I’d encourage everyone with a financed vehicle to pursue.
What to eat
I’m not sure I have a lot to add to the how-to-save-on-food discussion. I’m sure you’ve heard all of the tips that come most readily to mind. Use a grocery list. Make a weekly meal plan built around what’s on sale. Don’t shop when you’re hungry. Figure out what stores have the best prices on the items you buy most often. And if possible, don’t bring your kids to the grocery store.
Actually, I did hear one other tip recently that made a lot of sense. Online ordering. It’s a time saver and perhaps even more importantly it can be a money saver. When we’re in the store, most of us pick up items we didn’t intend to buy. Buying online, and then being able to pick up your order without wandering through the store, can remove some of that temptation. A lot of grocery chains, such as Kroger, offer this service.
What tips do you have for managing these “big 3” categories?