Want to know the easiest way to save money? Brace yourselves, this is one is a doozy.
Spend less money eating out and cook more of your meals. This is an unconventional tip but it is one of the most effective. Let’s take a step back and I’ll explain from the beginning why this is important.
If you recall from the blog post Bottom-Up vs Top-Down Budgeting, I discussed the importance of creating a budget. Creating a food budget or an ‘eating out’ budget AND sticking to it can help you create a habit of saving more. I’ll give you an example of how this works. Last year, I ate out every day for two months. This was a result of me being a grad student and working over 40 hours a week at a very demanding job. Regardless of the reasons behind it, I went back into my credit card transaction logs for one month, I had spent over $600 in one month eating out!
I didn’t realize that much money was coming out of my pocket just for food. I have to admit; I like to eat well and McDonald’s is not my list of places to eat. My meals on a regular basis were over $15 each meal.
Let’s do some simple math to show how I ended up spending $600 in one month just on eating out. I ate 7 days a week and about 2 meals a day either at a restaurant or a fast food place. Let’s average that I was spending about $11 a meal, that equals $22 a day. In one week, I spent $154 and in a month $616.
Here is how you can save a significant amount of the money by cooking your own food. By now, you should know how much money you spend on eating out because you have tracked your spending using Mint. I suggest taking a percentage of your eating out expenses and reallocate that money to groceries. You will begin to see a difference.
Using the example, I gave, reallocating 20% of $616 is $123. Taking that $123 and spending that on groceries for about 3 weeks. That results in a savings of nearly $500! Of course, your numbers don’t have to be this extreme and you can adjust them accordingly. Another example, if you typically spend $300 a month on eating out, reallocating 50% of $300 gives you $150 for groceries. With creativity, this can last about a month. The remaining $150 can be saved.
If you were wondering why you can’t save any money but eat out very often this is the reason. Reducing how much you spend on eating out and reallocating that money toward your savings or emergency fund and you will see a change in your finances.
The assignment for this post is to reallocate 20-50% of your budgeting eating out to buy groceries. You can determine how much you want to reallocate. Try this out for a month and adjust accordingly.
As always. Happy saving.