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I Needed It. Really!

Have you ever told yourself “It was such a great deal; I couldn’t resist” or “I don’t eat out for lunch that often”? If you have, then we have something in common.  These types of miscellaneous expenses don’t seem like a blow to the budget at the time.  I mean, my son will eventually grow into those cute jeans, and I’ll be glad that I got them on sale.

Recently, though, I started adding up the cost of all of these little extras.  Exactly how much money was I spending on “miscellaneous household and personal expenses,” and how could that money grow if I saved it instead?Take last week, for example.  Unfortunately, the list gets a little long, so I won’t bore you with all the details.  I’ll just hit the highlights.

First, there was the toy I picked up for my son while we were shopping for new clothes on Saturday.  He was being very good and deserved a reward.  Add in take-out Sunday night because I had been working hard around the house all day and didn’t really feel like making dinner.  Then there was lunch out on Wednesday, or was it Thursday, because I was running late and didn’t have a chance to pack?  I think it may have been both.  Add a couple of dollars for soda from the vending machine here and there. At the end of the week, my husband and I decided to do family night out – dinner followed by ice cream.

Oh, and did I forgot to mention that I quickly popped into my favorite department store and picked up a new sundress while I was out getting my hair done?  They were having a great sale, and I had a coupon! So how much did these miscellaneous expenses set me back?  Maybe I should ask “what if?” instead.

What if I started investing an additional $50 per month?  How much would I save over 30 years if I could earn at least a 6.00% annual rate of return?  Or what if I paid just $50 extra per month toward the principal on my mortgage?

It might surprise you to know that I could more than double my money to over $50,000 when my $18,000 investment compounds, or I could pay off my 30-year mortgage 5 years early and save over $30,000 in interest charges.

Life is full of choices, and I believe in enjoying the time I have.  Do I really think that I’m going to stop buying toys for my son or going out to eat?  Not really.  But an exercise in basic budgeting may help me drag myself out of bed just 5 minutes earlier some days to pack that lunch.  Or I might decide that I don’t really need a new dress right now.  After all, $50,000 could buy a lot of new shoes.

If you’d like to see what making a few changes in your budget could mean to you, check out the great calculators on our web site.  I used the savings calculator and the mortgage loan calculator to determine my savings.

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Posted in Banking Basics.

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