Saving Mentality is More Important Than How Much You Earn

If there is anything I have learnt about saving money then it is one thing- it is more about your brain than your pocket. What I mean is, if you have a saving mentality, chances are you will save more than someone with double the income and lack of saving mentality.

Spendypants Mrs. S

Over past decade we have seen our friends amass a lot of stuff. We have collected an impressive amount of things considering we started with a few bags of clothes when we got married. The only difference is we stopped when we had all that was required for our comfort and daily functioning. We haven’t replaced any appliance or furniture in past 5+ years. As people go out and buy new this and that or exchange a perfectly working fridge for the latest model we prefer saving.

Lest you think we have always been so you would be half right. Mr.S has always been the saver of the family. I on the other hand did not fare as well especially with my attachment to footwear. When I joined my first job over 7 years ago saving was definitely not one of my goals. It was luxurious life, good food, clothes and shoes. Sure it seemed cool to have 1 lac in my bank but that was almost 6 month’s pay and then me, could definitely not save that much on my meager salary. When we got married he had 1 lac saved up and thankfully I had also started saving a small sum each month.

At that time we believed saving 10% of your income is good, after all we don’t really make much right. Wrong. I can now see where we wasted money and how we could have been in much better situation than we were. I have talked about our wasteful habits before and a lot of those were a result of consumer mentality. Fully stocked fridge and pantry was in my mind a given even though we were eating out most of the nights. A lot of food was wasted and 5 years ago we were spending at least 1.5 times of our current expenses every month even though the city we lived in was far cheaper than where we are today.

What we assumed was a result of our low incomes was actually a result of our wasteful consumer mentality. When I look back now I could have easily saved over 10K more every month and even if invested poorly they would have made us far richer than we currently are. We might not have been earning a huge sum (which we aren’t earning today as well) but a few lacs saved over the years would have helped us to reduce the amount of home loan or even to build a corpus which allows us to retire and live the life we want.

Shift to Saving Mentality

When you shift your wealth building focus from earning to saving you get triple bonus. Your expenses come down which means you need less money to survive. This also means your savings will stretch farther. As your income increases over the years the saving mentality will allow you to save even more while you maintain low expenses. If you save 10% it will take you 9 years to be able to take 1 year off; but if you save 30% you get a year off every 2-2.5 years.

When we shifted to the expensive city we were told that it will be next to impossible for us to save any amount. The people who told us this were right and we would have suffered if we had not chosen the right home close to office, monitored and reduced our expenses. We did negotiate a raise in months following the move, but we are currently spending far less than we were barely 1 year ago. Our spending in expensive town is almost half of our previous budget. This is when we pay higher utility charges and almost everything is costs more.

Now we concentrate on maintaining and increasing our savings while living our royally frugal lifestyle. Having a saving mentality does not mean starving or depriving yourself. If that was the case we would not have been switching to organic food as we try to save more. Our lifestyle is very important for us and to be true not much has changed except we go out eating less often. Apart from resulting in a healthy amount of savings it is definitely making us healthy as well.

The Results

Would we have been able to even think about retiring at 40 without previous spend as you go mentality? Nope.

Would we have survived the move to expensive city without dipping into our existing savings? Nope.

We would probably not even have been able to equate our home loan. Even though our calculations taught us that keeping money in our investments was better than locking it to equate the loan we can finish off the debt if we want to. This is a very strong psychological motivator and depending on how you think can result in more spending or more savings.

It would be easy for one of us to say ’let’s not save anything this month and go out and buy this thing or that’. There is nothing really we need to save for anymore if financial independence was not on our radar. There are times when I think back and am thankful that I don’t feel the same way about money. I now see money as a means to my independence rather than a tool to increase dependence on more things.

Want to shift your focus?

If you are in the same boat where we were five years ago I know it feels like nothing is working for you and whatever you earn goes somewhere which is not your bank. I also have a two steps for you to start with.

  1. Take a reality check and Know exactly down to the last digit how much you owe in debt and how much you have in assets. Subtract the debt from assets and that is your real net worth.
  2. Write down your expenses –every single one (including those cigarettes) counts. (Drop the habit it will be life changing!)

These two might not be the last steps in actually increasing your savings but they are for sure the biggest steeps you will take. A lot of us don’t realize how much we spend on frivolous things like TV, expensive clothes and accessories and most importantly eating out. A few thousands every month will make a huge difference in how your net worth sits not just a few months from now but also when you call it quits.

Changing your mentality can take time or in some cases like ours it just becomes a necessity. Once you start looking at the expenses through savings tinted glass you will find a lot of ways to cut your losses.

Organic on a Budget in India- Slash the Grocery Bill

Organic food has started featuring more and more in our staples and other grocery options. Over past three months we have consciously tried to include most if not all organic food options in our dietary chain. There are two main questions which I had before we got on the organic bandwagon.

  1. Can you even taste the difference, is there a difference?
  2. How much will it increase my budget?

The answer to above questions is yes and not much respectively from our last three months of experience.

The truth is most organic produce is expensive, and in many cases twice the price of generic store brand. Another truth is that a lot of that price is because of fancy packaging of the product. When we decided to switch our regular grocery items for organic options we were lucky to find a major promotional sale on a brand. That allowed us to get a few supplies (which we are yet to run out of) for quite cheap. If you go back and look at this expense report you would see our haul and we have been adding to the pantry little by little.

We are yet to go over our budget because we bought a lot of organic food options. This was a major surprise for me because I was really sure we would easily triple our monthly expense. Here I have to admit we are short of organic options for a lot of things we eat especially pasta and noodles which is am sure I can’t make at home. Instead of talking generally let us talk about the specifics.

Buying less = wasting less=spending less

Organic Staples which will last us over 3 months. Total cost- ~1150/-
Organic Staples which will last us over 3 months. Total cost- ~1150/- (and a few regular food)

We like most people out there love shopping, but unlike them we go extra mile to find a few deals. This meant we were buying a lot on cheap prices, but the fact that we were eating out a lot (see our June expense report) meant a very small portion of this was actually getting used. This meant a lot of wastage and a lot of food unwillingly donated to the pests and bugs of the house.

We now buy only enough so that we consume it in next 2-3 months for dry staples and week or so for fresh produce except dairy. Dairy lasts a lot longer if you buy the right kind and store it right. Our grocery bills are right where I would like them and include a lot of ingredients you would probably not find in most Indian kitchens like Asian sauces, balsamic vinegar, olives etc. We also buy pasta, noodles, tortillas and more which add to the grocery bills in big chunks.

No Sugar- not even Organic

We are both savory people and enjoy savory food and beverages more than their sweetened counterparts. Though we enjoy aerated drinks every now and then they are never a part of our monthly grocery haul. Not only does this shave off a bit from our grocery bills it has also reduced a lot of junk from our diet. We also consume less than half a kg of actual sugar between the two of us in a month. For this year the store near us is running a promotion for free sugar every first 1000/- you spend in a month. We send this to the ‘rents and have been transferring the savings to eating real organic food.

No junk food= more money for real food

You will notice very few potato chips will ever have organic written on them and those which do, come at a great price. We have of late reduced our consumption of snacks and any saving gets transferred to eating organic actual food. To be true we still have a long way to go to completely get the junk out of our food but the reductions we have made are clearly evident in our budget and food habits as well. My next goal is to make some snacks ourselves using our organic supply just to know what goes into our bodies.

Research the hell out of everything

Organic food is expensive till you are buying it from anywhere. The only way out of higher prices is to grow/farm it yourself or to research the hell out of the products. Our research and curiosity (as with anything financial) has helped us keep the costs down as well as find organic produce when we thought none existed. Like the organic milk we stumbled upon while browsing the aisles of the supermarket. With the offer on the milk it came out way cheaper than our current non organic UHT milk. Similarly yesterday I discovered that one of the bigger online grocery shops have their own brand of organics which is 10-20% cheaper than the branded ones we bought last few months.

Grow Organic Yourself

Like making our own snacks growing our own food is something which I am currently looking at with great interest. Today’s task is to scout our apartment’s terrace and see if we can put in place a few plants there. My currently rewarding exploits are in organic sprouts. I have been growing them successfully to quite good lengths from organic mung beans I brought. Barely an hour a week allows us to munch on these for snacks or include them in our meals multiple times. To be true you might hear about a boutique sprout shop soon.

All of the above will help you not just eat organics on cheap but they can be implemented to simply reduce the grocery bills whatever the eating habits might be. If you have better solutions for us to help us lower our bills and eat better (especially if I can use it in India) that would be awesome.

Expense Report July 2016

August is here and it has been the rainiest start to august I have ever had. If the locals are to be believed we should be expecting all monsoons to be exactly like this as long as we are in the expensive town. All said and done July was a month of great relief and revelations. It was also a month which saw us realizing we actually need far less than we thought.

In July we decided to get through the month without going out to eat. It turned out to be transformational for us, especially me. Small expenses of 10-20 Rs were something I never really gave a thought to. You’d be surprised how much daily 100/- add up to in a year. Forget about what it does to your health when you eat out frequently it was costing us over 5K in eating out. That’s more than what some people save every month and definitely way more than the actual food we were buying.

Not spending anything in a day is weird and actually not an easy thing to reconcile your mind to. When we would think about what we needed to buy and came up with nothing it was a weird feeling. We have had days where we spent nothing a big fat 0 out of our pockets and those days are very different from what we have been used to in past 5+ years of being married.

Now getting back to the expenses for the month of July a big chunk of our expenses was preventive health check-up. Thankfully we are not suffering any major illness but both of us are highly deficient in vitamins. You know what that means- further expense of buying supplements. Thankfully we have reliable online sources where we can buy these otherwise we would have been running even higher numbers.

This month also continued in the tradition of breaking things- our food processor is now running on only one jar and we need to find replacement jars or will eventually have to buy one. For those wondering we use it extensively and whip out a lot of things which others buy in the condiment and other jars. We expect to get some free coupons around October which will go into this in case we do have to get a new one.

Expense details

Getting back to our spending in June we ended up with a grand total of 17381/-

Medical-Physical Checkup- 4100 (23%)*

Grocery – 2595.26 (14%)

Medication(vitamins)- 1760.5(10%)

Socializing/hosting- 1455 (8%)

Paid lunch – 1365 (7%)

Electricity bill- 1275 (7%)

Bike maintenance- 1010 (5%)

Business expenses – 848.5 (4%)

Internet – 700 (4%)

Cleaning supplies & other miscellaneous – 681 (4%)

Petrol- 500 (3%)

Eating out- 522 (3%)**

Helmet- 350(2%)

Taxi- 135 (1%)

Parking- 40 (0%)

Haircut- 40 (0%)***

* Without this expense it actually comes out to be a pretty decent month in terms of our expenses. actually taking away the medical checkup, vitamins bought and one time helmet expense we ended the month at  11170.4/-

While the number above looks pretty good we actually failed our aggressive goal of keeping our expenses below 10K for the month. There were a few slips along the path like the Rs 522 you see in front of eating out should have been 0. We are taking better actions to make sure that we carry breakfast every day. Also the Lunch lady suddenly feels very expensive and we would have both been very happy without paying 1365/- for our lunches. We are trying to at least reduce the cost by half by packing our lunch as much as we can. Assured lunch makes sure that we do not end up spending 200+ at one of the cheap places nearby.

** Though there is no excuse for the behavior this head shows but in our defense practicality and sensibility is more important than saving money. After a particular long evening hunting for some household supplies we were far too hungry and a burger seemed like a great idea. August we have taken the ban off and still I am not really happy eating out, not just for the cost it amounts to but I like my own food better.

*** Yes you read that right, Mr. S spent a fairly small amount to get his mane tamed. For me the best part is that even in the expensive city we live in this is  very much possible. We did go to a big salon in the mall few months back and he likes both the results equally.

For August my goal is to keep the expenses under 12K and to be true the expensive start we have had to the month makes me skeptical. We are quite well stocked with all essentials including milk and I am hoping for quite a few zero expense days.