Why spending more to 'save' is a dumb idea

June 13, 2011 By Peggy Mackenzie

May was our month of reckoning. After letting our budget gather dust, we decided to take a look and see where we're really spending money.

My husband and I both promised to write down every purchase, including those under $1. It was hard and I constantly wanted to cheat but since I’d only be cheating myself. I resisted the urge.

When the kids were young and we had a big mortgage, keeping track of our spending was easy since we didn’t have much left over. After the mortgage, utilities, car and groceries our discretionary income was negligible.

The kids are older and we're making more. But costs are up too. There's sports, saving for post-secondary education, and forking over never-ending school fees. We realized recently that we'd lost track of things. We have more to spend and we're spending it When trying to lose weight, cutting empty calories are the first to go. Likewise, with household spending.

The first thing we noticed was that a lot of 'one-time' expenses were actually recurring. The May down payment for our August vacation rental became a June hotel payment for the same holiday. Car maintenance happens at least twice a year, and a bill always accompanies the car home. There are vet bills for the dog and summer camp fees for the kids. The solution was to change our budget.

Another thing we noticed was that we were spending more than expected to 'save.' We had bought online coupons for restaurants and started using them. The problem was that we were going out more often than planned and so weren't really really saving anything at all. Going out once in a while - fine. Going out three times in one month to 'save money' - bad.

After looking at gas bills, my husband started walking to work and takes the car occasionally, where he was before the winter hit. The fifteen minute walk is refreshing for him and our car.

Our daughter loves scanning the flyers and writes down where all the deals are. We'll be reviewing sports memberships that aren't being used. Our son loved karate for years, but football is his new passion. As a family, we have to decide if we need hundreds of cable channels (I vote no).

We've continued tracking our bills for the month of June and if we're smart, it will turn into a life-long exercise. The spreadsheet is started; the next steps will be to transfer it to one of the many budgeting databases. Finding the fat in our diet is making it easier for us to shed the debt.

Also read Krystal Yee's post on Budgeting Tools.

You can contact Peggy Mackenzie at pmackenzie@thestar.ca or follow her on Twitter: PeggyMackenzie