Tightwad Tuesday 3: Snip, Snip, Snip

So you've taken the plunge and drafted a budget (whether meticulous to the last penny or somewhat faster and looser), and now you're looking at the bottom line. If you're lucky, your bottom line is a positive number. If you're like most of us, it's a bit redder than that. But no matter what your final tally is, chances are you want or need to make some cuts. Another option would be to add income, but we'll look at that another time. Maybe you need to put more money into emergency, retirement, or college savings (in that order, please). Or maybe, like us, you need to find money to, uh, buy groceries.

There are many ways to trim your budget - you can look for big-ticket items, or small ones. Things that can be eliminated immediately, or reductions you can work towards over time. We're looking at all of them, but today I thought I'd focus on some of the small stuff. It really is true that the little things add up over time, and sometimes it's easier and faster to make small changes. While it won't solve all of your money worries, it is good discipline, and it does ultimately make a difference.

Small savings can be made in myriad ways, and every person or family will find a different approach. A friend of mine poured tons of her disposable income into cab rides, but made an effort to get up in time to take the bus or walk. She quickly started saving enough money to make a significant impact on her budget. Others may find that entertainment costs, clothing, gadgets, or hobbies are a bigger slice of the budget than necessary. For us, one key area on which to focus is food costs, including groceries, dining out, and snacking on the run.

We've already made a difference by recommitting to planning dinner menus for the week, and making sure some of the meals provide leftovers for lunches. Convenience foods - like the frozen lunches we used to fall back on far too often - are a quick way to add to the grocery bill. DIY is another way to save, and we already make artisan-type bread using the No-Knead Bread recipe. We're exploring other homemade options, too, but the reality is that we can't make everything and juggle jobs, a toddler, a pregnancy, and chronic illness. So we weigh the convenience versus the cost. Right now, for example, the convenience of canned beans outweighs the cost savings over dried. Perhaps later we'll change our minds.

Much like budgeting is essential to getting your finances in control, cost-comparisons are crucial in trimming spending on things like groceries, toiletries, or other disposable/perishable goods. Shelli keeps a price book where she writes down the cost of goods at various stores, and says after months of tracking prices, she doesn't really need the book - it's all in her head. I'm enough of a geek that I have to have a spreadsheet, so I made one up and printed it out. It lives in my bag, and every time I'm in a store, I jot down the prices on a few items (even if they aren't what I'm buying on that trip). Already it's helped me confirm that many goods really are cheaper - sometimes significantly - at Costco, but not everything.

The small things can also be some of the hardest to change, as they tend to come from the discretionary areas in your spending, so cutting back too quickly or severely can lead to feelings of deprivation and frustration, which may backfire and derail your entire financial plan (much like overly restrictive dieting can lead to a compensatory binge). We may eventually need to be more severe in our cutbacks, but so far have tried instead to reign in carefree spending and make sure that
1) we make the most cost effective purchase possible
2) we use what we buy (we've eaten some sad looking carrots lately, let me tell you)
3) we ENJOY what we eat and make it special, whether it's home-cooked or a treat from a restaurant.
We're not making dramatic eliminations from our grocery purchasing (except cereal - we did switch to oatmeal for breakfast because packaged cereal is SO expensive) and not stopping restaurant and snack purchases altogether, because I know that would make us all depressed and grumpy. So far it's working - and we're enjoying better meals as a result.

There's so much more I could write, but now it's your turn:

What is the area where you can really make small savings add up, and what are your tricks for doing so?