Friday, 31 July 2009

Tame My Budget 3 : Daily Budget

I hope that by now you already have a clear plan of how you could cut some of your monthly expenses in order to meet with your average income. Do not worry if your income still unable to cope with the expenses because we still have some room to improve on our daily spending, in order to bring the gap closer.

In terms of money power, daily spending can provide more saving compare to monthly expenses. This is because daily spending contribute the spending weight every day of the month. Even the slightest change in daily spending can contribute a lot. Imagine that you could cut off your daily expenses by $5 per day, by 30th day of the month you would already save $150 in total.

The downside is that, changes in daily must be made routine. If you have to cut $5 for one day, then you have to repeat the same cut every day until the end of month in order to have full accumulation of savings. That is a definite lifestyle changing experience. However, in my experience, when we change something in our life, if we maintain the routine, by the end of the month we caught up with the habit and the changes feel more transparent in our life.

Let us look at each details of our daily expenses. I am using my Excel file as a reference.

How much do you spend on food alone? Using your daily tracking, you can check out the average spending on food. This category covers the monthly trip to supermarket to fill up your home food storage, the daily lunch spending, the daily dining out, the weekly fast food trip, that candlelight dinner for that special occasion up to all the junk foods and tit-bits that you purchase between meals.

Here are some tips that you can try to practice if it suit your lifestyle:
  1. Do you regularly take breakfast by eating out? How much do you spend on that breakfast? If you do not take breakfast at all, how much can you save throughout the month? Of course you need to take breakfast, since skipping breakfast is not recommended for your health. Our body have starved for 8 hours during sleep, it need fresh energy to start up the day. But how much food do you need to consume every morning for that energy? Do you swear on 2 pieces of roti canai, 1 plate of nasi lemak with egg and large teh tarik (sound familiar)? Hmm, I wonder if anyone take steak for breakfast? Hehe. Your body should be able to tell you how much food you actually need to consume. Try to cut down on your breakfast and see if your body can handle that quantity of food until lunch. I have been experimenting with myself to finally understand that 1 slice of bread and jam with a cup of hot chocolate (Milo) are more than sufficient for my body to survive until lunch. How much does it cost for my breakfast? I even go further saving by eating at home. Right before going to work, I prepare my own breakfast (bread and Milo is not really that hard to prepare myself) and eat at home. The cost for the breakfast almost transparent because the bread and the hot chocolate was bought one time early the week and able to support for the whole week breakfast.
  2. Do you eat out for lunch too? For those at work, that is pretty obvious because it might not be convenient to eat at home during lunch (of course unless your house is just next to your workplace or if you are actually working from home). I prefer to prepare my lunch at home and pack to have it at workplace. At least, having lunch in cafeteria save my time and fuel from having to drive outside of my workplace. Try to look for small change in habit that can help to cut down your daily lunch spending. Pack your lunch from home, for example, or try to reduce the food you have to consume during lunch. If you had a big breakfast and still full, you may also skip lunch altogether. Try experimenting on you lunch habit but do take care not to go too far until your body unable to cope with too drastic change.
  3. How about dinner? Do you cook at home? Do eat outside? Do you regularly buy cooked food for dinner? For those with family, I would proposed to eat at home in the comfort of your house within the closeness of your family. Not only your could save on money, you could inject family values. I lived a single life but I cooked at home much more frequent than eating out. Eating a home-cooked dinner not only help on saving but it help to ensure the quality and cleanliness of food. Eating cooked food from outside means that not only you are paying for the raw food, but you are also spending on the service to cook the food. Why not spend on raw food and cook for yourself to avoid the extra expenses? But I do not have time to cook. I do not know how to cook. I do not even have a kitchen at home. All this downside might demotivate us on changing our dinner habit. Simulate your budget and see how much you could actually save just by making your own dinner. Observed if that spending is worthwhile for you to find time to cook, or learn to cook or start to buy some cooking appliances for your home. If you do not spend too much on your dinner, sometimes eating out might be a saving for you too. Shape your budget to suit your lifestyle.
Essential Self-Care
I believe things I bought for my daily self-care is just as important. Maybe because I live a metro lifestyle which looking good is imperative for me. Thus, buying self-care product like shaving cream, razor, face cleanser, body soap, shampoo, conditioner, hair treatment, moisturizer, perfume, clothes and shoes (sounds like I am starting a saloon, right) seems important to me. Do you have similar habit? If you do, your tracking should show that a big chunk of your spending could flow to this category. Look for ways to slow down your money flow for your self-care product. During shopping, be perspective to price tag more than looking at the brand. Expensive product do not means that it is the best for you. If you have a habit of buying high class self-care product, go on and try out on those cheap brand off the shelf. See if it works for your body. I used to swear on Biotherm product which easily cost $150 per product, then I change to Loreal which around $60 and then later I change to local Malaysia brand that normally range between $20 to $30. That is already an 80% savings and I do not experience much change in my outlook between using local brand compare to using Biotherm. Try it and see if your body able to cope with the change.

Hehe, big controverting topic on this. If you are a smoker, you might heard a lot of advices to STOP SMOKING. But if you are like me, I would say that is more easy said than done. For those non-smoker out there, this would not be a problem. For smokers, read on. First, check how much you are spending monthly for your cigarettes. It is important to know how many sticks of cigarettes that you smoke in a month, at less in average. I used to smoke around 800 sticks per month which a little more than 1 pack of 20s per day. During that time, I am spending $300 for my smoking habit. Then, I changed to a cheaper brand. Without changing the quantity of cigarette I smoked, looking for cheaper brand per pack, drop my spending to $120 per month. That is a lot of saving. You might said that cheaper brand does not taste as good as those expensive ones. You might said that your body cannot tolerate cheaper brand. You might even said our body will die faster if we smoke cheaper brand. My question to you, have you try them? I have tried to change cigarette from one brand to another. Due to their marketing value, of course taste of each brand is different. But how do you actually define that this type of "smoke" taste better than another type of "smoke". How does "smoke" taste like anyway? The rejection of new taste was because of your habitual behavior. That is what smoking is, a habit. When you are in a habit of smoking one type of brand, changing the brand feel uncomfortable, just like forcing yourself to change a habit. Same like any habit also, if you give it a try, make it a routine, by time your body will learn this new habit. Previously it took me 3 weeks before I am comfortable with new brand of cigarette. Now, I am able to change the brand and be familiar with it within just around 3 packs. That gave me more versatility of changing the price of cigarette I smoke, at least I do not have to stop smoking all together, right. I would propose you to try this method, give your body a change to adapt to the change before you decided to give up on the trial.

Vehicle & Transportation
Do you have your own transport? Do you take public transport like buses or LRT? Here are some tips that you can try to save on this expenses:

  1. Regular maintenance is a must. Visit your workshop for service every 5000km or 3months (whichever comes first). Regular checks help to detect early degrades and able to repair before it get worst. If you tend to skip maintenance, if your car experience major breakdown, the cost to repair will be much much higher.
  2. Learn to be more educational towards car modification especially if it going affect the car performance. The car designer and manufacturer have build the car to its specification to improved on its engine power, fuel consumption and safety. Changing this specification might affect all this. Not only that you are putting down your money to invest on the modification, you might reduced the car lifetime if you are stressing too much on its capable engine power. You also might drain your money having to spend on more fuel if the modification increases the car fuel consumption. Worst, you are playing with your life if your impact the car specification to be less safe on the road.
  3. Driving style also affect fuel consumption which will deter on your expenses. Drive slowly in a consistent speed. Driving at more than 120km/h compare to drive at 90km/h have huge impact on your fuel consumption. I do not normally drive more than 90km/h and my current fuel consumption is a little more than $0.11 per km (with our current $1.8 per liter of fuel). Moreover, drive slowly means not only it is safer, but you will use your brake lesser which improve your brake lifetime. If you drive faster than average, you will keep on having to play with your accelerator, your gear and brakes in order to react to other traffic which will drain your fuel faster and reduce your engine component's lifetime.
  4. Air condition is another feature in most car that will increase your fuel consumption. Turning on your air condition will used twice as much fuel than without air condition. Of course you swear on the luxury of having a cool fresh breeze blowing on your face but that luxury is expensive. Can you live without it? Or at less reduce its usage?
  5. Your car usage habit also affect the spending on your car. Try car pool if available or convenient. Use public transport especially for that long trip back to hometown during festive season. I own a car and motorcycle. I tend to ride more on my bike compare to use my car. Furthermore since I normally drive alone without much baggage to carry, I do not see why I have to depend on my car for those light trip. If you always drive your car to bank to settle your banking or paying utility bills, try to opt for online payment instead. That will minimize having to make that trip to bank, used more fuel, spend on parking, stress yourself by screaming at other driver in traffic jams and so on.
There are many ways to save on your daily expenses if only you look out for these opportunities. Remember that, if you used to have lavish your lifestyle with all those unnecessary spending, making changes in lifestyle is not going to be easy. Having a close track of your money flow will help you to be more enthusiast on changing your spending habit because of the visibility of savings that you can see every time you change something in your life. $1 save in 1 day, goes a long way.

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