Budget Management – Personal CAPEX

The past week I found myself deviating from my financial discipline. Considering it is summer in this part of the world, the so called entertainment expenses, namely eating out and drinking with friends have increased – it has moved from support levels to the resistance levels.

This along with other such day to day conversations got me thinking about other “avoidable” expenses. For the readers wondering what’s the point in pinching pennies (a view I once shared with them), the point is not pinching pennies but wasting the long term dollar growth by not keeping a check on the short term pennies. You have to start somewhere and starting somewhere which governs our everyday lives is the best place to start. To have a budget is one thing, but to be managing it is another ball game. 

The following is what I came up with and I absolutely hate spending more than I must on them:

 

Not having a shopping list

Not having a list to shop for is not only a waste of time (a precious commodity on this planet), but also sets you up for an impulsive purchase. Do this consistently and you are buying something you may not necessarily be using, or ends up going bad.

 

Banking costs

I absolutely hate the banking corporations. If I weren’t an investor, I would call them Public Enemy No. 1. I mean after the 2007-2008 financial crisis, how is it not one of the executives got jailed? People lost their life earnings and essentially paid for their mistakes.

The part I hate the most about the banks is their cartel like behaviour by enforcing bank service costs in charging people money to “safe-keep” their account should they not have a minimum balance. Add to that, the restrictions on maximum transactions based on your account balances.

To make things worse, one transaction would involve a debit and a credit entry of the fee that would have been charged if you did not maintain that dollar balance for your selected banking plan. I mean, I am absolutely aware of the balance I carry and do not need the accounting entries. Should you feel the need to enforce the accounting visibility do it behind the scenes so it does not affect the advertised maximum transactions limit for the month.  

Then, there is email transfer costs and extra bank charges if you withdraw from a different ATM machine. I mean we are in the 2017 where everything is so automated and integrated that it really should not cost the end-customer much to be using these services.

Further, we have credit card interest charges. The so-called “minimum amounts” for a given due date is just another way of these banks telling you, “Give me that, and I would disappear”, before adding “see you next month” under their breath, once you do give them that money. Jokes aside, I make sure not to carry a credit card balance. At times however, you may find yourself tapping into the credit card for extra cash and that’s okay. As long as you are beating them at their own game.

 

Living it up

I never understood the meaning of this phrase. How can you live it up by being a spendthrift to the point where you may not have anything later on? Lately, I found myself splurging more than my usual self in this category.

However, if you are doing this on a continuous basis, the $1.50 Tim Hortons at work would cost you $375 on an annual basis (assuming 250 work days). Add to that once a week lunch costs at $10 dollars, which would add up to $520 annually (assuming 52 week year and no vacations). Now, I don’t know about you but I can think of many ways to employ half this amount to give me dividends.

Considering coffee and tea is religious for me at work, I shop them at the grocery store and buy them for my office usage.

 

Cable Costs

Canada is home to one of the few countries in the world with huge cable and internet costs. As a millennial, I find myself not in a need of having a cable. I can live without it considering there are many cheap legal alternatives available to fulfill this void.

To a certain extent, I believe using public transportation, and/or biking to work is another way to save big! Although, this might not be an option for those of you who are starting their family or have young family to take care of, it is worth considering.

Note: To have a clear understanding of where you are spending (because I can assure you, you would falter once in a while), it is important to know the exact figure of your outflows. I would be doing my Net Worth Update soon, and I am excited for this. Can’t wait.

What are some of the daily costs that you can absolutely do without or have been trying to cut down on? Perhaps you are already past that point, in that case how were you able to win over your inner demons consistently? Please share in the comments below.

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