Beautiful roses growing in the garden
We live a much more luxurious and decadent lifestyle than we should on our income and budget -we feel rich, far richer than we are. We do.
One of the things that worried me most when Disaster Struck was that with no income (and we went for years without a regular income, and months at a time without any income at all) was that our lifestyle would change. I didn't want that to happen, I didn't want to not have the things we needed, let alone the things we loved and enjoyed; I didn't want to fee poor and deprived, and so I became a Cheapskate.
I learned to get us the things we needed and wanted within our budget. And I became very conscious of just how much things cost, and how much we weren't spending to get those things.
Delicous homemade chicken pot pie
If we'd had to buy them, we wouldn't have been able to have them. Nowadays, I know better, and I simply won't spend money I don't need to on the things we need and want. And I firmly believe that money isn't saved until it is safely in the bank. Until then it just isn't spent!
Each week I look back over our spending, and what we didn't spend. When it is appropriate, I move the amount we didn't spend to our savings (at the moment most of it is going to our holiday savings account, ready for our trip in May). I've been doing it so long it's habit to me now and just one of the things I do on autopilot.
Violas in a pot - grown from seed, they put a smile on my face every time I see them
But if you're new to the idea of paying yourself the money you didn’t spend, it can be confusing.
A friend wrote
"Hi Cath
Just wanted to say I'm really enjoying your new series on the blog about what you spend, what you don't spend etc. I really want to adopt your method of transferring money saved by making gifts or cooking from scratch etc into a savings/holiday type account, and I was hoping you might be able to explain what you do a bit further for me please?
I get the general idea, it's more the finer details I'm not sure how to deal with. For example, in your second week, where you made the cinnamon scrolls (I feel like some now btw!) and sausages rolls. As you mention, both would cost heaps at the bakery, so your saving is significant. But you also said that of course you wouldn't actually buy that many from a bakery. So I guess what I'm asking is where you would transfer that money from in order to save it given that you wouldn't have that amount in your grocery budget?
This is just an area that has always tripped me up a bit when trying to work out the value of what I do in our home. There are a number of things like this that I do, baking, sewing, crocheting etc, and while I know they improve our lifestyle, I also know that they are things that if I didn't make them, we just wouldn't have them. For instance, I would never pay a huge amount for something like a handmade quilt for one of my children, so I don't feel like I've really saved money, I've just made something nice that we otherwise wouldn't have.
I've spoken to Annabel about this before in terms of her
Vicky Challenge, and can see the benefit of recording what something I've made would have cost to buy, even if I wouldn't have bought it at that price. But where I get stuck is actually transferring the money so that it is truly saved. I love the idea, I'm just not sure how to transfer money saved when the amount is more than is in the budget. "
Strawberries in our strawberry patch - they just keep on giving, year after year
And this is my answer
"Hello and lovely to hear from you. I actually read this last night before I went to bed, then spent all night thinking about how I could answer so it makes sense.
First, I believe that money isn't saved until it's actually in the bank - until then you just haven't spent it.
You'll see I have three headings each week:
1. what we spent
2. what we didn't spend
3. what we saved.
What we spent
This s obviously, well what we actually spent i.e. groceries, petrol, chemist, hardware, clothes or whatever for the week. As the utility bills come in they'll be included in this amount too.
What we didn't spend
This is the area where I calculate the retail value of what I, or Wayne, have done for the week. You'll see costings for Wayne's coffee, lunches, baking, gardening, mending, cleaning, shopping around for better deals on utilities, major purchases etc.
This is mind boggling when you add it all up, and is what Annabel's Vicky Challenge is about. I don't consider this amount savings, because it's not banked. Rather it is money we didn't need to spend to maintain a rather comfortable, sometimes luxurious, lifestyle - the money that non-Cheapskates would spend without thinking about it to maintain their lifestyle. Does that make sense? Let me know - I can try to reword it if it doesn't.
You mention making the quilt for your children as not being a saving, and unless you actually put the value of the quilt into the bank, it's not saved. But the value of the quilt is important to show the value of your lifestyle. As you said, if you had to buy it, then you wouldn't. But making it has added value to your lifestyle.
What we saved
This is the amount I actually shift into our savings accounts each week.
For example, with petrol, I budget $80 a week, but these days I don't use anywhere near that much. I try to fill the car on the cheapest day and when it gets to about half a tank - just my fuel security and OCD kicking in. It's rarely more than around $50, depending on fuel prices of course. So each week I take the leftover money and shift it into our holiday fund. I can do this because the $80 has already been budgeted for, so the money is in the fuel account. I could leave it there and let it build up, but I like to see our holiday account grow - gives me something to look forward to.
Then there are a lot of things I'd never buy, because no matter how well off we will ever be, I just can't justify the price when I have a less expensive but just as good, if not better, alternative I can make - like the cinnamon scrolls and the sausage rolls. Or like paying for a manicure, these days I do my own nails and while they will never win prizes, I'm happy with them and I don't spent the money each week or fortnight.
These are the things that we can afford on our budget because we don't buy them (does that make sense?). There is no money in the budget for these things, so I don't have the money to move to savings.
This is money we didn't spend. And this total is important because at the end of the year I can see just how much living the Cheapskates way really saves us - a lot more than a full-time job when it's all added up. I get to be a full-time stay-at-home wife (our children are adults now, still live at home but don't need me to look after them), caring for our home and garden, because we don't spend tens of thousands of dollars every year on things we don't have to - and yet we don't go without a single thing we need or want.
We live the life of Riley, I'm sure, and all because we are aware of the value of what we have and do.
Frankly I'd much rather bake a batch of cinnamon scrolls than work at a paid job for three hours to earn the money to buy them - to me it's a no brainer!
Goodness I hope I haven't confused you more - but I hope this explains how I work out the value and the saving."
It's not really complicated, and it's just something I have always done. It's not vital to living the Cheapskates way, or sticking to your budget.
It does make you feel better though when you see the luxuries you enjoy on your Cheapskates style budget, and that is the secret to feeling rich, rather than feeling deprived.
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