In the last two class exercises we dealt a lot with frivolous spending, or spending that you might have found stupid or unwise. Here we are going to go after the big expenditures that may not be “stupid” at all, and certainly aren’t frivolous. But the only way for most people to significantly reduce spending is to tackle major monthly expenses.
Exercise #1: Look back at the budgets from Classes #3 and #4. Do you spend more than 15% of your take-home pay on transportation?
Question #1: If you do spend more than 15% on transportation, how can you reduce your transportation costs? (If you live in a city, can you get by without a car? Can you walk or bike more and rely on paid transportation less? Can you car-pool?) List any idea you can think of here, whether or not you would be willing to carry out those ideas.
Exercise #2: Look back at your budgets from Classes #3 and #4. Is your rent more than 30% of your take-home pay?
Question #2: If your rent plus utilities is more than 35% of your take-home pay, how can you reduce your rent? (Can you live with roommates or housemates? If you already have roommates or housemates, can you live with more? Have you exhausted your social networks trying to find reduced rents? Can you live somewhere more affordable and still make your commutes? If you can’t reduce rent, can you reduce utilities bills?) List every idea you can think of to reduce housing costs.
Exercise #3: Look back at your budgets from Classes #3 and #4. Do you spend more than 15% of your take-home pay on food and going out to eat?
Question #3: If you spend more than 15% of your income on food, how can you bring that number down? (How often do you go out to eat? How much could you save if you bought more groceries and spent less on prepared food?)
Question #4: How expensive is your phone plan? (Wifi is everywhere now, do you need the data plan you have?)
Question #5: How much could you save if you spent less on things that you know are unhealthy?
Question #6: This question may be more abstract, but remember, we are talking about you, not someone else. How much could you save if you spent less on things that do not align with your values? Feel free to elaborate as much as you would like.
Final Exercise: How much would your life improve if you had less financial stress?
OK, now after asking yourself this question, see if any of your previous answers change.
If you’d like to talk about your answers, feel free to email spendsmartliverich@gmail.com
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