Trimming the fat

Young Money - Vanessa Kunderman
Young Money – Vanessa Kunderman

Millennials love to overspend. We love traipsing down to Baked Expectations for no reason other than hanging out with other millennials – pumpkin spiced lattes in hand, new iPhones tucked into our back pockets.
A common thread weaved through many millennials’ curiosities on the financial world is: “How can I spend less?”
Well, other than overhauling your habits, try putting yourself up to the challenge of a financial diet.
The bathroom scale isn’t the only place you can see numbers drop and your confidence soar.
Step 1: Review
Examine three months of your previous online banking to spot trends on where you’re spending your money – all those Rockstars from 7-Eleven really add up. Calculate what you’re spending on rent, food, utilities, car payments, savings, loan payments and other fixed bills, and then determine all the other items being subtracted from your account.
Dining out, buying coffees, $1.99 purchases on your favourite game apps, Netflix – these are the types of things you should be looking for while reflecting on your three-month history. If you regularly spend on your credit cards, include the histories from those as well.
Calculate the average of how much disposable income you’re spending over the three months. For example: In July, Lucy spent $800 between buying clothes, dining out, going to movies, etc. In August, she spent $900 on her luxury items, and in September, she spent $600.
$800 + $900 + $600 = $2,300/3 = $766.67 average spending per month.
Step 2: Trim
Now that you know how much spending money you are doling out on average, cut that number in half. This is your financial diet number. $766.67/2 = $383.34
I always suggest splitting this number in half again or into four increments, depending on the frequency of your pay schedule. If Lucy gets paid biweekly, she knows that every two weeks, she has just under $192 to spend on fun things.
Remember, Lucy’s $192 every two weeks is not for spending on groceries or her cellphone bill. This is strictly for the disposable money she is spending on things such as new shoes, brunches, alcohol, etc.
Step 3: Keep track
For the month of your financial diet, be conscious of where you’re spending your money. Every time you’re asked if you want a receipt – take it! Keep a running tally of your receipts so you can be sure you aren’t going over your set financial diet number (FDN). I always find it easier to use cash so I know I won’t go over my FDN, but do what works for you.
Once you make it through your diet month, look at your bank balance. I bet you aren’t feeling too bad about yourself now, are you?
And that wasn’t that hard, was it?
After overindulging, you sometimes have to rein it in to get back on track. And hey, the holidays are coming – and you just might need your fat pants.
Vanessa Kunderman writes every month on money issues facing millennials. Email her at: hello@vanessakunderman.com.

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