This is a guest post by Philip Taylor, owner of PT Money: Personal Finance. Check out his blog to discover more ways to save money, make extra money, and spend money wisely. See his latest review of the best small business credit cards.
I remember the days of being single. My wife (then girlfriend) and I both worked full-time, had simple and affordable living arrangements, a car payment each, insurance, cell phones, and utilities. That was it. No children, no mortgages, no pets, no nothing. Like many people do in this phase of life, we squandered our money. Hemorrhaged it. Tore it up into little pieces and threw them at oncoming traffic. Well, not quite. But we might as well have.
At that stage in our lives, it seemed so logical to take the fat chunk of money left over from each paycheck and blow it on whatever looked fun. We thought nothing of dropping twenty bucks three times a week at our favorite Mexican restaurant. We bought new clothes all the time. We hit up the theater and the mall and the bookstore when we couldn’t think of anything else to do.
Now that we’re married with kids, our priorities have changed. Our focus is different. My wife and I have had to change our wasteful ways and start doing the things that people do when they want to make the most of their money. You know, like making a budget? Eating in? Telling ourselves no? … any of this ringing a bell? No? Sigh. Okay, you wasteful singles, get out your iPads. Here are my 4 tips for living like your married in order to save some money.
Develop the Long-Term Mindset
I’m not saying you need to open up college savings accounts, or get insurance on your “future spouse”. But you should start thinking about what you want in your financial future. If you plan on getting married and having kids one day, then it’s no stretch to say that you should start preparing your finances now. As a single earner, you have a great deal of flexibility now to create the financial life that you want. Getting out of debt, saving for retirement investing, and building side incomes are all things that single people can do much easier than us married folk; simply because it’s easier to move the pieces around to make it work.
Have a Simple, Automated Plan
The single most effective money management tool you can have is as simple as a piece of paper and a pencil. I know, I know– the word “budget” is so lame and married-sounding. But once you’ve saved a fat load of money and don’t have to worry about whether or not you can use your debit card, you’ll thank me.
For our budget, I simply check our bank balance online, add whatever money will come in that month, and write that figure at the top of the page. Then I subtract our monthly expenses one by one: first the fixed (unchanging) expenses, like rent and car payment, and then the unfixed ones. Some categories are up to you. Do you want to give yourself $50 for spending money each week? Or do you really need to apply that to your excessive credit card debt in order to pay it down? (My advice: pay it down, but also give yourself some play money or you’ll go crazy.)
Once you know how much money you’re going to have to spend, you may be surprised at the money left over. A good rule of thumb when first starting out would be to automatically invest or save half of the leftover money, and automatically put the other half in an emergency fund. Treat savings just like another bill. Make a plan for it. Give every dollar a place to go.
Make the Most of Your Spending
Everyone is different, so you’ll have to take an honest look at your own spending habits to figure this one out. Some people find it helpful (to the point of being an epiphany) to track their spending for a month and see where their money goes. I know my weakness. It’s dining out.
I love the convenience and fun of hopping in the car and going someplace where I get waited on and can have a zillion choices about what I’m going to eat. So that’s an area I’ve learned to do better with. And the math is encouraging: eating out costs my wife and I at least $15 per night, more if we eat somewhere nice. Monthly, that’s over $500. And that’s not counting all the other grocery spending on breakfast food for the weekdays, lunches for the weekdays, snacks, paper products, etc. However, if we cook, I’ve discovered that we can eat like kings for only $80 dollars a week or $320 per month, grocery bill included!
One of the best ways to save money is to adopt an old-fashioned mindset. Depression era stuff. No, I’m not suggesting you make your next winter coat out of a flour sack. I’m talking about saving energy, re-using things, and generally being a conservationist with your paycheck. Make every effort not to run your heater and A/C unless you’re truly uncomfortable without it– and even then, don’t just crank it up or crank it down. Try lowering the temperature only a degree or two. Invest in a programmable thermostat.
Make your showers brief– only take long, luxurious ones as treats at the end of a bad day or long week. Invest in re-usable products, like cloth dish towels instead of paper towels in the kitchen. A lot of money gets wasted on things that we throw away and re-purchase each week.
Make a real effort to buy real ingredients when you go grocery shopping. Convenience foods are often expensive, and not very good much of the time (which leads you straight back into the waiting arms of the nearest Mexican restaurant…). Buy fresh fruit and vegetables, meat and poultry in bulk (freeze the rest and you won’t have to purchase more for a while!), pasta, rice, and spices. You can do a lot for very little, and it will be healthy, too.
I enjoyed my time as a single guy just as much as I’m enjoying my married life. They are just different experiences. But I do wish I had done more to prepare my finances when I was single. It’s so much easier.
If you are married, what tips do you have for living a money-saving single life?