At the end of the month do you ever wonder where all your money went? One of the simplest ways to save more money is to not spend it in the first place—right? Easy Peasy! But there are some things that you HAVE to spend money on for the family. A roof over your head, electricity, water, to name some of the most basics. To really grasp the whole picture, you will need to track every dollar you and your family spend, then clearly identify the differences between expenses and spending. (see What I Learned When I Started Tracking Our Spending).
Reducing Mandatory Expenses:
Here I will focus on ways families can SAVE on things they HAVE to buy. We call them mandatory expenses because families have to spend some of their money on some things whether they want to or not. These expenses may be found within two basic categories: fixed mandatory expenses, or variable mandatory expenses.
1. Reducing Fixed Mandatory Expenses
Fixed mandatory expenses are things that you cannot usually change based on your daily choices. Everyone has to eat, so everyone has a basic food expense. Most people in North America consider a basic cable or internet service a necessity. Basic car and life insurance are also considered necessary by most families. Even if you are away and don’t use any, everyone has a basic hydro and water bill. Some basic household repairs and maintenance may be considered a necessity; and a roof over your head is a necessary mortgage or rent expense. Although you can often make some changes to minimize these fixed expenses, it usually takes a lot of effort or lifestyle changes to do so. You should make a list of these expenses in your life and be aware how much of your financial pie they represent, (See: Breaking Down the Budget for Kids LINK) but these expenses might not be the first ones to tackle, unless you are looking for something drastic to jumpstart your savings journey.
2. Reducing The Variable Portion of Mandatory Expenses
The variable portion of a mandatory expense is the portion that you can save money on. With small changes you can create some big savings. For example, you can make choices that will reduce the usual expense of grooming by having fewer haircuts. Your groceries, utilities, clothing, shoes, grooming, gas for your car, food for your pet; these are things that you must spend some of your money on, at some point, but you have the ability to make choices that affect how much these items bite into your budget.
Reducing the cost: Couponing, shopping flyer or sale prices, or buying in bulk for food items you know won’t go to waste can save money on things you need to purchase anyway. If you pay attention, you will notice that most items cycle through their lowest sale price regularly. I don’t have time to make a science of it (though I’m sure it’s there), but even I notice, I have some favoured brands for certain items, but I will only buy them if they are on sale. So, assuming it is a non-perishable item, when my favourites go on sale I stock up. Sometimes, others in the house with the authority to buy groceries, I won’t name Queenie, but she knows who she is, will get the bright idea that one of my favourite items can be replaced by a no-name brand just because it is on sale. I point out strongly, that it is not a good sale if the item will does not get eaten.
Doing without: If you have a pet, you have committed to the costs that they will incur, the food they need, and the vet visits to keep them healthy. But remember, they can do without a shiny new leash and brand new toys if you have some used ones, and in most cases they can do without pet clothes, although there are some very large pet stores that suggest we like to spend lots of our discretionary income on our pets. Now-a-days, with cell phones in high use, many people are choosing to do without their old landline telephone as a way to save money, especially if they can add a home line to their internet service for much less than the cost of the traditional phone line.
Conservation: Another easy money-saving tip is to conserve, being careful of how much you use. Don’t waste your food. Eat what you buy and save leftovers for another meal. Conserve your other consumables. Teach your kids to not use too much shampoo or toilet paper. Take care of your clothes; mend the hem on your pants; teach your kids to take care of all their belongings and set a good example by taking care of yours. Conserve water by turning it off when brushing teeth and have quick showers. Use less hydro, and pay less for it by turning off all lights when you leave a room and use energy-efficient light bulbs; run your dishwasher, washing machine and dryer in off-peak hours only; and use blankets to keep you warm at night. Use your car and gas less by planning the order of your errands. Although you cannot completely eliminate your mandatory expenses, these conservation tips can help reduce them.
Repurpose Old Items: How many times have we thrown out an old item that, with a little creative thought, could have been repurposed into something we needed anyway? Old bed sheets and towels make great rags instead of paper towels—no need to feel guilty if the rag is so dirty you want to throw it out later. An old bookcase makes great shelves hung on the wall in the garage. Broken down work boots make a beautiful planter for cactus-like plants. Before you throw old things out, have the kids help you think of it in a new light and see if you can come up a new use instead of buying new.