| Sargent & Lundy Savings Investment Plan |
| MENDING YOUR SPENDING |
| The following excerpts are from an article in the Spring
1997 issue of the "MFS Perspective" magazine. The opinions expressed
may or may not reflect those of the SIP Committee.
Here are 10 ways to curb your expenses without curtailing the fund in your life, allowing you to save and invest more: 1. Start keeping records. When it comes to spending, ignorance may be bliss, but it's also the path to the poorhouse. So the first step to getting your spending under control is to monitor where all the cash goes. You don't have to make daily entries in an accountant's ledger. Just keep all your receipts or make a note every time you walk away from a cash register. Then, at the end of each week, tally your expenses. Or you could buy all your groceries, gas, and restaurant meals with a bank debit card. Then your checking account statement will offer a record of most of your expenditures. (It goes without saying that if you carry balances on your credit card, don't use it for routine purchases, unless you want to add higher finance charges to your monthly budget.) You may be amazed to discover where all your cash goes. For example, your expense record might reveal you spend $10 a week on magazines that you never find the time to read. Knowing that will help you exercise more discipline the next time you browse at a newsstand. Setting a savings goal can also help you avoid impulse buys. If you're aiming to have an extra $80 left over at the end of the month, for example, you'll be able to walk through a department store without succumbing to the siren call of those beauty consultants behind the makeup counter. As you record your expenses, be sure to track the results of your cost-cutting measures, as well. Did you save $15 clipping coupons and $10 by washing the car yourself? Then earmark that $25 for your savings and investment accounts. Otherwise, it's too easy to spend that money somewhere else. You're far more likely to keep reaching for your scissors and your spouse if you have something to show for all your efforts. 2. Slice your restaurant tab. Are there more take-out menus on top of your refrigerator than recipes? If someone asks whether your stove is gas or electric, do you have to think twice? If you answered "yes" to either of these questions, you just may be eating out too much. But who has time to cook anymore, you ask. Well, make is easy on yourself. Buy a few cookbooks that offer 20-minute recipes. Frequent the prepared meal section of your grocery store. Take advantage of the services that will deliver groceries to your door. The service may cost a few extra dollars each month. But you'll probably still save more in the long run, given that restaurant meals are often three or four times more expensive than the home-cooked variety. If your mouth waters for the pizzas, buffalo chicken wings or ribs the delivery people bring right to your door, don't try going "cold turkey." If you're ordering out nearly every night, cut back gradually until your dialing for dinner just once or twice a week. To make eating home-cooked meals more of a treat, spruce up your kitchen with a new tablecloth, place mats or candleholders. Leftovers won't turn into biology experiments in the back of your fridge if you place a magnetic marker board on the refrigerator door so that you can write down and remember what tasty morsels you've stored inside. When you and your spouse do opt for the pleasures of being waited on, take advantage of coupon booklets that let you order two meals for the price of one. Also, frequent those establishments that can make an evening out less expensive. Some restaurants, for example, offer discounts on movie tickets. Check to find out if your favorite exclusive restaurants have early-bird specials. At 5:30 p.m., the duck a l'orange may cost half of what it does two hours later. 3. Avoid the mall temptations. Regularly walking out of stores with three bags when you had intended to buy just one item isn't a sound fiscal habit. But impulsive shoppers can rely on a few tricks to avoid going broke at the mall. Make a list before you go shopping and tell yourself you can't exit the stores with anything not on the list. Empty your wallet of all your credit cards so that you buy only what you can truly afford. Impose the 24-hour test on big-ticket purchases. After sleeping on it, you may realize the exercise bike you so desperately wanted probably would turn into an expensive clothes rack. For smaller items, exit the store and have a cup of coffee to escape the spell cast by the merchandise display. The rod and reel in the hands of that mannequin wearing waders might look great, but it may not help you catch any bigger bass than your old reliable rod does. 4. Don't let pleasures make you a pauper. Budgeting for entertainment is difficult. You may tell yourself you're going to have a quiet month, then your favorite play comes to town or you get a chance for front row seats at the big game. After paying for the tickets, parking and food, your evening of fund can set you back $100 or more. Surely, you don't want to limit the pleasures in your lie, but if good times are busting your budget, supplement costlier forms of entertainment with a few freebies. An afternoon spent strolling through the park, biking or hiking won't cost you anything. Community bands, choruses and theaters are always looking for new members. You may discover a hidden performing talent. If behind the scenes is more your style, put your skills with a needle or hammer to use as a costume designer or a set builder. Call museums in your area to find out if they offer free or reduced admissions on a particular day of the week. Or spend a night or two every month debating the merits of a good book over wine and cheese as a member of a reading group at your local library or nearby bookstore. Many high schools and community colleges offer low-cost adult-education classes. You could even learn a money-saving hobby. An auto mechanics class might enable you to take care of routine car maintenance, while a furniture refinishing course may help you salvage relics form the attic. Some classes -- such as photography or cake-decorating -- could launch you into a profitable part-time venture. 5. Be a humble hobbyist. When in the throes of excitement over some new hobby, it's easy to get carried away. You want to own all the equipment the magazines and catalogues suggest you need to be a true devotee of that pastime. But if your basement or garage is filled with the remnants of previous fascinations - a dusty pool table or rusting scuba tanks - you may need to take things slow. Even if you loved your first few days on a golf course, there's no need to rush into ordering a personalized set of clubs. Keep renting for a while. If, a month later, you decide that you can't stand chasing a tiny ball around 18 holes, you - and your pocketbook - will be glad that you waited. 6. Saving at bill-paying time. Even when sitting down to pay your bills, you can take steps to increase your savings. If you make charitable donations, use a red pen to write the check and to enter the amount in your ledger. At tax-filing time, you won't forget any of the deductions you can claim. Before writing a check for any bill, observe the age-old adage, "pay yourself first." Immediately write a check to your savings or investment account. Consider paying your bills with automatic deductions from your checking account to save on stamps, envelopes and time. Invest using automatic deductions, too. The money will go to your investment accounts before you have a chance to spend it. 7. Make saving for college a family affair. To build up that college fund, encourage relatives and grandparents to add to it during holidays, birthdays and special occasions. Tell your kids a portion of what they earn delivering papers or baby-sitting must go to the college fund. When your child starts school, invest the amount you used to spend on daycare. If you pay your child an allowance, invest an equal amount in the college fund. 8. Don't forget the nest egg. Don't put off investing in your retirement fund, hoping you'll be able to make up ground by investing more each year as you get closer to retirement. The earlier you start, the better off you'll be. If you have a 401(k) at work, take full advantage of it. If your employer matches any portion of your contribution, you can effectively get a raise -- or an increase in your total compensation, anyway -- without having to ask for one. And a 100%, 50% or even 20% match is a handsome initial return on your contribution to the plan. 9. Keep raising your investment ante. Increase your investments each year by investing at least a portion of your annual raise. You lived without that money the year before; chances are you'll be able to get through the next year without it, too. Write a check to your investment account as soon as you deposit the check for any bonuses or tax refunds, so that you won't be tempted to spend that money on anything else. After you eliminate debt -- such as a car loan or credit card balance -- write a monthly check to your mutual fund for the amount of the old bill. 10. Be realistic and reward yourself. To improve your spending and saving habits, you needn't become a miser. If you try to stay completely away from your favorite haunts -- the shoe store or golf shop, for instance -- you may find yourself going on a $500 splurge one day because you can no longer stand denying yourself. Spending is a bit like dieting. Just as you're more likely to stick with a diet that lets you indulge in rich desserts now and then, you're more likely to remain committed to a savings program that lets you spend frivolously on occasion. So don't pull out your credit card every time you see a pair of shoes you're convinced you must have, but do set your eyes on your favorite pair and visit the store when you've accumulated enough extra money to pay cash. |
This page updated on 7/28/98