This Easy Budget Hack Could Save You Hundreds Each Month

May 31, 2017

If you’ve ever taken the time to categorize your monthly spending, chances are you had a similar reaction that I did when I realized how much we spend on food each month – disbelief with a side of regret, anyone? It’s just the hubs and I for now, and we are pretty good about eating in, at least compared to a lot of our DINK (dual income, no kids) friends, so I’m always shocked when our grocery spending sometimes tops what I’d expect a family of four to spend.

Food is expensive…

The fact is, food is expensive and who wants to walk around the grocery store with a calculator? There are ways to counteract that by planning your menu around the grocery store sales, buying in bulk, etc., but sometimes life is just too busy, I know. So here’s an easy hack that I learned from my friends Jill and Andy:

The hack…

One week per month, skip the grocery store and instead eat what’s already on hand. Then take the money you don’t spend on groceries and transfer it to your savings account or use it to boost the payment on a high interest rate credit card. The only number you need to know is what you spend each week, on average.

The long-term effect…

This hack alone could boost your retirement savings by over $250,000 if you stick with it over the years or literally shave years off your debt payments if you use it to get out of credit card debt sooner. Plug your info into the Debt Blaster calculator to see the difference.

Get creative in the kitchen…

That’s it! No coupon clipping needed. It may require a little bit of creativity in the kitchen, but I always find it’s easier than it seems – digging out those jars of interesting sauces I impulse buy at Trader Joe’s or finally using that extra cooked orzo I froze feels so good and budget friendly. You can also use Supercook, a website that let’s you input ingredients you have hand, then suggests different recipes. Plus, it helps to clear your pantry, fridge and freezer of food that may otherwise end up in the trash – a double financial bonus!

Follow This One Simple Rule for a Secure Retirement

May 26, 2017

While I was taking pictures of my middle guy and a whole bunch of his friends right before their senior prom, I was having a conversation with one of the other kids’ fathers. The inevitable conversation about what kind of work we do came up and he was, at one point in his career, working for a large accounting firm that has a wealth management arm. When he found out I was a financial planner, he shared a story about his colleague who ran that part of the business and had built himself a very nice retirement portfolio. My prom-dad-buddy asked him what the secret was that he used to grow his wealth & that of his clients.

The answer was simple: “Always live on your income from 5 years ago.”

When I heard that, I thought it was an interesting concept. If someone is accustomed to pay increases on an annual basis, this allows for a considerable amount of savings each year. This is a concept/theory that I had not heard before playing amateur photographer at prom time. But, it’s consistent with my very incredibly simple rules for personal financial management:

  • Spend less than you make
  • Don’t take on high interest debt
  • Save 10% or more of your salary
  • Always live on your income from 5 years ago

How it works

At a 3% pay increase, someone who earns $50,000 this year would earn $57,963 a mere 5 years later. Living on the original $50k would allow that individual to save almost $8,000 (probably closer to $5,000 after taxes & benefits) that year. If that same person contributed 10% of their income ($5,793) to their 401k – that’s one heckuva combined savings rate (>18%) before we even consider an employer matching contribution or account growth. If that pattern is repeated for a couple decades….retirement starts to look awfully secure. (I tried to do the math, but it got complicated. Suffice it to say, we’re talking about doubling your savings or more with this method)

There are a whole lot of very simple methods for becoming financially secure and these are just two of them. Managing your financial life isn’t as complicated as a lot of people make it sound. I’m a financial planner who hates the term “budgeting” because it sounds so restrictive and so much less than fun.  I prefer to have a couple of quick & easy spending guidelines instead, like these grumpy old man rules.