Last time I talked to you about discretionary expenses and asked you to keep track of your day-to-day spending on them. Were you shocked at how quickly all those little purchases add up?
Incidental Discretionary Expenses
I’d like you to do one more thing – go back through your bank statements and bills from the last few months and look for your incidental discretionary expenses. Remember, these are things you buy infrequently, usually only once per month or less, e.g. gym memberships, cable and internet, haircuts, vacations, and gifts. Add them up so you have a good idea of how much you spend on these a month.
Now you have an idea of how much money you spend a month on necessities and discretionary expenditures. What now? Do you want to start saving more money for retirement? How about pay that debt down? Maybe you want to put some money away for your children’s or your own education. Where is the cash going to come from? You have to look at your expenditures and see where you can cut back.
Even if you’re not looking to make major changes in your financial game plan, you can still benefit from all these exercises. Do you really need that $5 latte every day? You may scoff at the idea, but I bought myself a hot pink moka pot for the cost of a latte and make my own espresso drinks. Cutting out $5 a day gives you cash you could be spending on your next vacation, or on that dress you’ve had your eye on. Remember:
$35 a week equals
$140 a month
$1,680 a year
$8,400 over 5 years (which equals one amazingly luxurious trip to Paris!).
If you’re really looking to sort out your financial life and goals, I suggest getting some professional advice. You can start off by looking at books – I recommend Suze Orman’s Women and Money to any woman wanting to take control of her finances. If you want to cut back on discretionary spending, check out Catey Hill’s Shoo, Jimmy Choo!. If you’re very serious about your financial life (and I hope you are), you should consider finding a Certified Financial Planner (CFP) to help you achieve your goals (if you need help, Suze Orman has a great section in Women and Money on how to choose a financial advisor).
I really hope these last few weeks have encouraged you to take a look at your financial situation and maybe even inspired you to take some action to ensure your financial future! Shine on, financially savvy Tranquilistas!
Katharine Albritton is an art market specialist and writer. Procrastinate with her at The Fine Taste Emporium and follow her on twitter.