Friday, January 08, 2016

Frugal Fridays: Minimizing Variable Expenses

Last week, on Saturday (my bad!), I shared some ideas on how to decrease your fixed costs (like, the necessary ones for life).  Today, some ideas to get a handle on other costs in your budget - those that vary.

Variable expenses are those bills and purchases that can be significantly more or less each month and are, therefore, much harder to budget for.  You can still aim for a specific amount to spend on each and you can still save, though!  While some of these expenses are absolute necessities (like food!), they can still be minimized. . . and others can be virtually eliminated.



Some Variable Expenses and Tips to Minimize Them:

Transportation

Okay, so the last post included transportation as a fixed cost. . . what gives? Well, things like the cost of your bus pass or car payment are clearly fixed, but there are other expenses associated with getting around that are more variable.  And you can, and should, budget for them too!

  • repairs - regular maintenance can help to avoid many costly repairs but sometimes things happen unexpectedly, or as the result of an aging vehicle.  Plan ahead and put aside a little bit of money each month just in case.
  • gas - the price of gas can vary like crazy! So how to budget for it? I like to look back over 3 months of payments (I use my credit card to pay at the pump so it's easy to do so) and take the average per month.  Alternatively, consider how often you purchase gas and approximate how much a tank costs you.
  • other transportation costs - even though you may have a public transit pass, maybe you grab a cab once or twice a month? include it in your budget breakdown. . . if you don't use it, bonus cash! If you do, at least it's covered.
Medical / Dental / Optical Bills

If you're lucky enough to have insurance that covers dental and optical (as well as all prescriptions, procedures, etc.), there is likely little you need to include here.  If you're not, remember to set aside some funds each month to cover your next dental appointment or contact lenses.  It's not glamorous but it's so necessary!

Groceries / Take Out / Restaurants

Likely your largest variable expense will be food.  This is another area where many would say to never get take out or go out to eat if you're on a budget.  Again, I think that's totally unreasonable! Part of making a budget is being able to stick to it. . . and a budget that is too severe and strict will not be one you can stick to.  And, if you didn't know from my other Frugal Fridays posts, this is the variable cost that I am most passionate about. . . and the one that has made the biggest difference in our financial and physical well-being :)
  • Plan your meals (here's why you should and here's how I do it), make a grocery list and stick to it.  Include plans for take-out nights and dinners out (limit them but include them) so you don't give up halfway through the week.
  • Consider couponing or using a easier method to save at the store (like Checkout 51)
  • If you don't know how to cook, there's no better time to learn! Consider getting out to a cooking basics class (check with a local college or with your city / region's health department), checking out a class online (here are some sites to check out) or pick up (or borrow from your local library) a beginner cookbook (here are a few worth checking out)
  • Make yourself some easy breakfasts to take with you if that's your weakness (it's mine - but here are some ideas to stop), and buy yourself a good (or even a cheap) coffee maker (here's why you should).
  • Make yourself a great lunch to take to work (upcoming post alert!) - the night before if you're more together than I am, or on the fly in the morning if need be.
  • Try to "Make it Meatless" at least once or twice a week (ideas here and here) - it's healthy for your wallet and your body :)
Entertainment / Clothes / Pets / Hobbies / Etc.

Trim.  Limit.  But don't make the mistake of assuming you can live without.  We just purchased a new Xbox One and a host of games.  It was expensive (although less expensive because of Boxing Day sales!) but, for us, so worth it.  We also have a Tivo with a middling cable package.  Also worth it.  Because that's what we like - we play games, together and separately, and we watch movies and shows when we have time.  These expenses keep us entertained and happy without needing to go out every weekend, or pay for a sitter and movie / theatre tickets regularly.  We still do those things, but way less often.  That's where we are in our lives right now.  Where are you? What is necessary to make your life happy and fun? And what can you limit?

As for clothing, obviously it's necessary :) But consider purchasing medium-value items - while there is no need for expensive name brands, sometimes you get what you pay for.  I can say, with confidence, that my Fabletics lounge / workout wear has lasted much longer than my Joe Fresh cheapies.  Worth it!

Debt Repayment

Ugh.  Not glam, but if you have debt, so necessary.  Always pay more than the minimum if you can swing it.  But don't make the mistake of paying more than you can afford.  When we were aggressively working on our debt, we found that we could manage about 25% of our monthly income in debt repayment, once we factored in all of our other costs plus a little bit for savings.  Once I went off on mat leave and our credit card debt was gone (yay!), we cut that significantly because our income dropped significantly.  What I did to determine how much we could manage is take our combined income, subtract our fixed costs and subtract a ballpark of reasonable variable costs (if we go over that estimate on occasion, I don't get upset about it because sometimes we're under that approximation too).  Out of what was left, I kept about 10-20% for savings and put the rest toward our debt repayment (Gail Vaz-Oxlade has much better advice on this whole budgeting thing so you should really just check out her site!).  Works for us.  What works for you?

Next week:  Living on a Cash Diet! It really worked for us to help get our spending in check. . . being more aware of it, for starters.  Maybe it's worth trying for you too!  Until then, happy shopping saving!

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