Friday, May 8, 2015

Budgeting Tip, Keep these out of your Grocery Subcategory

There’s plenty of potential savings in your current monthly budget.  The cash savings are hidden by our own human programming to make things simple.  You see, most of us take what’s already out there, versus reinventing the wheel.  When it comes to family budgeting, the examples available online do the job, for the most part, and keep us cognizant of where the money is going.  
If the budget template you start with works, then there really is no reason for you to change what isn’t broken.  Satisfied with the fact that you are budgeting, a step beyond what the average person doesn’t do, you become complacent and don’t think to scrutinize the budget beyond what is listed as a broad category and subcategory.  Case in point, Category: Daily Living, Subcategory: Groceries/Food.
An example budget found online at above address
Look at your budget.  Do you have Groceries or Food as a subcategory?  You probably do.  And let me guess, anything you pick up at a supermarket or grocery store falls under an expense within this category, right?  There’s just one problem with this.  Supermarkets have the word, “Super,” in front of them because they are much more than your typical grocery store.  At a Walmart, for example, you can buy plants and gardening supplies, furniture, tires, clothing and footwear, and you name it.  How many of you actually take the time to look over the receipt at the end of the shopping trip and circle expenses from the various non-food categories to take note of for your budget?  
If you’re like me, you probably just throw the receipt in a drawer and go off the bank statement at the end of the month to see what you’ve encumbered.  You may see, “Albertson’s,” “Walmart,” or “Costco,” on the bank statement and lump the expense all under the Groceries/Food subcategory because you’re just too busy to find that receipt and truly account for each type of expense.
Now I realize that some people take budgeting very seriously, and their family/personal budget would make an accountant proud.  These creative and budgeting to the extreme types, however, may still be making one easy to miss mistake, leaving alcohol and cigarettes within the Grocery/Food subcategory.
Oh no!  Not booze and smokes.  Please, Carlos, it’s all I have in this world to make me feel snuggly and skippy.  Sorry, friends, as much as it pains me, for I consume alcohol myself, “Vices” should be considered a separate subcategory.  Yes, you can argue that what touches your lips and goes down your throat (liquid and smoke), should be included with all other products that go down the hatch.  Nice try.
Vices must be accounted for separately.  Not as a threat to your enjoyment, but rather as way to keep track of your over-indulgence.  I’m spending about $35 a month on alcohol.  I don’t smoke.  My thirty five dollars of imbibing is from four bottles of cheap Cabernet Sauvignon, and a six pack of IPA beer.  What can I say?  I’m not a heavy drinker.  Nonetheless, there are times when I go over my $35 allotment, and it is usually as a result of going out.  “Dining out” is a whole separate subcategory for my family and me.  I’m thinking you keep this as subcategory yourself.  Again, there is crossing over happening here, just like a trip to the supermarket.  Do you have one or two drinks when you dine out?  Jessica, my wife, loves to get a “cocktail” when we’re out on a date.  She loves that word, “cocktail.”  She gets all giddy with excitement while looking at the drink list.
Okay, back to our topic.  So you see…alcohol and cigarettes belong in a separate subcategory because grouping them with Grocery/Food distorts how much is really being spent on sustenance.  You don’t need alcohol or cigarettes to survive.  You’d be better off comparing them to gasoline for your car, i.e., as a monthly expense you can’t do without unless you make a drastic change (biking to work is drastic and so is quitting smoking), but one you can curtail, i.e., cut back on given information that can be tracked.   For example, you want to spend less on gas each month?  Drive less or go slower.  You want to spend less on your vices, drink/smoke less or go slower (with life).
I apologize if I am giving your significant-other firepower to make their case about your lack of moderation, and total disregard for the amount of money that is spent monthly on your vices.  Getting defensive when your vices are under the microscope won’t help anything.  It’s best for you to come to an agreement with your significant other on an amount the two of you can agree is reasonable to spend on vices.
I’m thinking up to $55 is a reasonable monthly expense on alcohol, cigarettes, or both.  Going over $55 would be like a bell going off.  Where’s the fire?  Put it out and return to normal.  If the bell goes off each month consistently, you probably have an arsonist, and that arsonist is you.  Go get help.  $55 is an arbitrary number.  It doesn’t take into consideration how much smoking and drinking is actually happening.  After all, you could purchase 8-10 bottles of cheap wine or one that is really expensive.  You can save on two cartons of cigarettes or pay extra buying individual packs at the 7-11.  I’m looking at it from a dollar amount perspective.
Personally, I think if you’re on a budget, meaning you’re not rich and wealthy, spending more than $55 a month on a vice is damaging to your financial goals.  Jessica and I spend anywhere from $100 to $140 a month on alcohol.  The “Vice” subcategory allows us to celebrate when we spend less than $100, for that extra money is put to savings or paying down debt.  We’re not going to quit drinking Cabernet and Moscato, and an occasional microbrew or cocktail, but we can at minimum be aware of when we’re falling off the wagon, so to speak.
Shopping at a supermarket or one-stop-shop makes budgeting accounting tricky.  Don’t lose sight of the items that belong as expenses in other subcategories, and don’t lose sight of that receipt until you’ve thoroughly analyzed it.
Alcohol and cigarettes need to be in their own subcategory, “Vices,” and should not be lumped into the Groceries/Food subcategory unless you like distorting the actual encumbered sustenance expense.

“I don’t always budget, but when I do, I put the cerveza in with 'Food'.”--C. Osvaldo Gomez, the most interesting fin blogger in the world.  
Thanks for reading!

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