Budget Diet: The 30-Day Challenge

So you gained a few pounds over the holidays. Who didn't? Now your daily planner has a reminder to eat less so you can lose that excess weight. And if you’re like most Americans, not only did you eat too much, you spent too much as well. It’s time to trim that budget right along with that waistline.

Of course, saving is the key to a healthy budget, and to save more, you must spend less. In other words, you need to put your spending on a diet. Sure, there may be a few hunger pangs, but in the end, your finances will be much healthier.

A good starting point for saving money is to put yourself through a 30-day spending challenge. Think of it as a month-long boot camp with a drill sergeant in your face screaming, "You will NOT spend, soldier!" It's 30 days of cutting out all extras; you’ll spend money only on necessities.

First up, what’s a necessity? No, that fruit smoothy you bought on your way in to work is not a necessity. File that under luxury and move on. Necessities are "can't-live-without" items you use every day. (Please, stop whining about the fruit smoothy!). Here's a pretty short and universal necessity list:

• Food Shelter (mortgage/rent)
• Utilities
• Child care/education
• Financial obligations (loans)

As you can see, these are regular, recurring expenses. These must be paid for the health of your physical as well as financial life.

Next, it’s budget time. Set a budget for the “extras.” These can include eating out, gas, entertainment, etc. A good starting budget for extras is $250 for 30 days.

“$250 for 30 days?!” you say? Yep. You’re going to have to tighten that budget belt tighter than you’ve ever experienced. Tears may come to your eyes, but this isn’t about comfort, it’s about learning what you can live without (and saving money while doing it).

Look at food first. To begin, take stock in what you already have. Chances are good your refrigerator and pantries are full of non-perishable items that have been accumulating without use. Stop spending at the grocery store just because you’re accustomed to spending there every week. As a bonus, with fewer trips to the grocery store, you’ll spend less on fuel. Two birds, one stone. See, this won’t be as difficult as you first thought!

Additional saving considerations: because you won’t be out running around spending all that money on things you don’t need, you’ll have more quality time at home … where you can research and re-evaluate spending on such items as insurance and phone plans.

Other saving areas to think about:

• Bottled water—various studies have shown tap water is just as “pure” and tastes even better than bottled water. And, tap water costs MUCH less
   
• Cell phone—O.K., many people think it’s a necessity today, but at least be sure you’re getting the best deal
   
• Cable/satellite TV—do you really need all those premium channels
   
• Paper towels—use a washable rag for those clean-ups. Keep a basket of usable rags in your kitchen.

Can you think of ways to not only save, but increase your earnings? How about cleaning out the garage/attic and selling stuff you haven’t used in years on a site like eBay? And if you’re able to find time for it, a second, part-time job can also add extra money to the budget.

The 30-day challenge is about discovering things about yourself and your spending/saving habits. If it helps you stay committed, invite a friend(s) to join you in this challenge so you can offer each other encouragement, just like you might on a caloric diet or workout plan.

The savings you create from this challenge can go to help pay down debts, whether it’s a credit card, student loans or other personal loans. Or use the surplus to start/enhance an emergency fund.

Nobody expects you to stick to a budget like this for long-term savings, but it is a very good starting point, a useful tool for pinpointing areas that you can work on. After 30 days, you may have a whole new outlook on what you can live without.

If you’d like help with budgeting, Vantage offers free money management advice for members through Accel. Click here for more information.

Good luck!