How one couple tripled their savings by putting their finances on a “diet"
Monday, 14 December 2020
A few months ago, as my mathematically inclined husband reviewed our monthly budget at our kitchen table, he lamented that we had yet again failed to adequately save money.
Despite compulsively jotting down our expenses on a spreadsheet stuck to our refrigerator, we had managed to stay within our allotted budgets but somehow not add much money to our savings.
“Where did all of our money go?" I asked him. It took us another month before we could actually answer that question.
Here's how we cleaned up our cash ﬂow with a month-long ﬁnancial "diet."
Diﬀerent advisors recommend diﬀerent methods and lengths of time for ﬁnancial dieting, and strategies can range from eliminating activities like drinking at bars and eating out to prohibiting the use of credit cards. For us, we simply cut out all expenditures other than ﬁxed expenses, like rent and daycare, and absolute necessities, like food and medicine.
As we normally track our expenses monthly, we decided to keep our "diet" to a month as well. This proved a great model, as it allowed us to see the impact of our ﬁnancial reset by comparing our results to those from prior months.
My husband always teases that I am the family's resident "shopper," but we were both made aware of how much he shops during the ﬁrst week of our diet. Since the outbreak of the COVID-19 pandemic, he has turned to online shopping—and in particular websites like Amazon—to quickly get items that he might otherwise purchase at specialty shops.
Perhaps unsurprisingly, his happy clicking was negatively impacting our savings. So, for the month of our diet, we discussed at length how much we really needed something before he bought it. A new car seat for our growing toddler easily made the cut; a milk frother that he had eyed in the online electronics aisle did not.
As we drastically cut our overall expenses, we became increasingly aware of recurring charges, too. We kept subscriptions only to services we frequently use, like Netﬂix, and eliminated all others.
Shopping less, trading more
During the second week of our diet, our 17-month-old had a growth spurt and was desperately in need of new clothes. As I could not buy her clothes, I turned to friends and neighbors for hand-me-downs. A simple request for unwanted items in her size resulted in four bags of like-new secondhand clothes for her to wear.
When friends and neighbors did not have items we needed, we turned to groups like Buy Nothing—a global network of hyper-local communities that give and trade goods and services, rather than buy them. By using these same networks, we were also able to give away unwanted items to others who could use them, helping others in turn as well as freeing up needed space in our apartment.
Finding joy in saving
At the onset of our "diet," my husband and I speculated about the things we thought we would miss while dieting—good liquor for him, shoe shopping for me —and were surprised by how much we enjoyed buying less and saving more. Not only did we come to better appreciate our current possessions, but we learned that there were many expenses we simply did not miss.
Case in point: take-out food. Rather than ordering from restaurants, we challenged ourselves to try new recipes. In addition to expanding our culinary repertoire, we were also able to share the joy of cooking delicious meals as a family with our toddler, who proved to be a very enthusiastic sous chef.
Like any diet, it was not always easy to stick to our ﬁnancial cleanse. To reduce my temptation to shop, for example, I had to stay oﬀ of social media, and especially Instagram, for most of the month. At the same time, my husband motivated us to stay on track by sharing weekly updates about the amount of money we had saved.
Our growing bank account encouraged us to keep to course. And, by the end of our "diet," we had tripled our monthly savings.
The content provided is for informational purposes only. Neither BBVA USA, nor any of its affiliates, is providing legal, tax, or investment advice. You should consult your legal, tax, or financial consultant about your personal situation. Opinions expressed are those of the author(s) and do not necessarily represent the opinions of BBVA USA or any of its affiliates.
Links to third party sites are provided for your convenience and do not constitute an endorsement. BBVA USA does not provide, is not responsible for, and does not guarantee the products, services or overall content available at third party sites. These sites may not have the same privacy, security or accessibility standards.
You may also be interested in:
Savings & Budgeting
10 money moves you can use to save and earn more
Sometimes even small money moves can result in big rewards. Here are 10 smart, strategic and simple money moves to help you earn more, save more and prepare for a brighter financial future.
Savings & Budgeting
How to open a checking account
Are you thinking of opening a checking account to better manage your income and expenses? With the COVID-19 pandemic affecting jobs and the economy, it's a good time to make sure you're in control of your finances. Here's a step-by-step guide on how to open a checking account.
Savings & Budgeting
Pros and cons of a joint checking account
Joint checking accounts can promote transparency and simplify a couple's finances, but they're not a onesize-fits-all approach. Partners and family members should consider the pros and cons, and their own personalities and circumstances, before sharing a checking account.