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# Where has all your money gone? Into small, daily purchases.

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Ann Hermes/The Christian Science Monitor

(Read caption) A Panera employee restocks pastries during the lunch break at Panera Bread bakery-cafe in New York City. If you stop eating out for lunch and cut other extra expenses, you have more to save or to put toward debts, Hamm writes.

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Let’s say you make \$45,000 a year – that was the median income for a male in the United States in 2007. You pay 25% in taxes each year between federal, state, and local taxes of various kinds, leaving you with \$33,750 in money you bring home each year. Reasonable, right?

Let’s say you’re paid weekly. Your paycheck, then, is \$679 per week.

Now, let’s look at some hypothetical expenses.

You go out with coworkers for lunch each day, costing you \$10 per lunch. That’s \$50 per week. Right there, you’re blowing 8% of your take-home pay.

You hit Starbucks each morning for a pick-me-up. It costs you \$5 each time you stop, or \$25 per week. Right there, you’re blowing 4% of your take-home pay.

You have a smart phone with a data plan. Your monthly cell phone bill is \$100. Right there, you’re blowing another 4% of your take-home pay.

You have a few premium channels on your monthly cable bill, jacking it up to \$80 a month. Another 3% of your take-home income vanishes into the ether.

You go out to eat three nights a week on dates or with friends. Each time, you drop \$20 per meal, adding up to \$60 per week. There goes another 10% of your take-home pay.

You don’t want to take the bus and the mass transit to work, which would cost you \$4 round trip. Instead, you drive your car to work, which eats up two gallons of gas (\$8) and moves you further along on your maintenance schedule (say, \$4), moves you closer to a vehicle replacement (say, \$2), costs you tolls and parking fees (say, \$1 on average), and increases your insurance premiums (say, another \$0.50). That’s an extra \$11.50 each workday, or \$65 a week above mass transit. There goes another 10% of your take-home pay.

You buy groceries when you’re hungry and tired, and you don’t have a list with you. You do this twice a week and end up spending \$20 more than you should have each time. There’s another \$40 a week, or another 7% of your take-home pay.

You have a high-speed internet connection that gets you a nice data connection, but you rarely do much but surf the web. It costs you an extra \$40 per month. There’s another 2%.

These things, added up, make up 50% of your take-home pay. If you cut these extra expenses by half, you would have \$150 a week to save or to put toward debts.

The thing is, you can cut the half you choose. Just trim the half of those things that are the least important to you. Downgrade your internet connection and you’ll probably not notice it except once a month or so. Have friends over for dinner twice a week instead of going out and you still have a great social calendar. Write a grocery list and eat before you shop and you’ll trim back that grocery list. Start a “brown bag” club a few days a week at work.

Do those things and you’re most of the way there and you’ve likely not even given up on anything that really matters to you.

If you ever feel like you don’t have enough money, look around your life and ask yourself where the money goes. Every time you see money exiting your hands, ask yourself what you’re actually trying to get from that exchange. Is it social camaraderie? You don’t need to buy stuff for that. Is it convenience? Is it easy entertainment?

When you go away from that thought wondering why exactly you’re spending that money, you’ve found something to cut back on – and the cut won’t really hurt.

All it will do is put more money in your checking account without downgrading your life in any real way.

Frugality isn’t about deprivation or being cheap. It’s about making your money go somewhere that matters more rather than somewhere that matters less.

The post Why Frugality Matters appeared first on The Simple Dollar.