Let’s face it, no one really enjoys budgeting. Some of my clients have learned how to do it pretty efficiently with spreadsheets and app’s on their phones. But for most of my clients, working with a budget is often daunting, confusing and even painful. That is understandable when you consider most in our American culture don’t like the idea of having to constrain our spending habits. We like the idea of doing what we want, when we want with our money. In a nutshell, a budget is a buzz-kill for most of us.

With that said, a monthly budget is still essential if you ever hope to build a sound financial plan that helps to get you to your goals down the road. It’s like eating healthy veggies – you may not enjoy them, but you know they’re good for you, so you eat them anyway. Creating a budget and living by it may not be fun (it may even feel a little like torture), but we all know the budget is important enough to take the time to map it out and try to live by it.

However, creating the budget is just the first step. The next is actually living within its guidelines. This is even tougher to do. I’ve discovered over the years that my clients will put the hard work into creating a budget, but as time wears on, the budget fades into the background and bad habits creep in. When this happens, the financial plan begins to die a slow death in subtle ways. As I work with my clients through my planning process, we work through 44 major areas of monthly expenses that are most common in building a budget that works. But, over time, there have been 4 specific categories of those 44 that have become blindspots when allowed to slip. By revisiting these 4 categories alone, money can be discovered (sometimes even a lot of money) that can be applied to your financial plan, which can result in significant savings in retirement.

#1: Clothing

It often surprises my clients when we begin to dig into this category. Many of them are surprised (but not as surprised as they are with #2) at how much they actually spend on clothes. There are so many ways this can be addressed, but it takes a willingness to work a little harder at it. One idea is to purchase clothes from the clearance rack at the nice clothing stores. If you like quality clothes for yourself and your family, you don’t have to buy them all at Walmart to get a good price. The nice clothing stores have clearance racks that often will have great deals, but may just be the wrong season. Purchase them for the future. Second, perhaps your closet is full and you don’t need to purchase clothing as frequently. By purchasing a little less each month, you can save a lot. Challenge – look at your spending on clothing over the last 3 months, add it all together and divide it by 3 to get a monthly average. Now try to reduce that amount by 20% for the next 3 months. I’m willing to bet that will free up good money to put toward your plan.

#2: Eating out

This is the biggest budget buster of them all. Everyone I meet is surprised at how much they spend eating out (breakfast, lunch, dinner, coffee, snacks, etc.). The number is often higher than most other categories. Take the same challenge as above and see if you can reduce your monthly spending average by 20%. For some, this could be a very high number. You may need to make and take your lunch to work with you. Eat out at a restaurant two times less per month and choose to eat at home instead. Buy less Starbucks. All of these simple changes can really add up.

#3: Gifts

This is often the most overlooked category. We spend money on birthday gifts, wedding gifts, anniversary gifts, Christmas gifts and more. The kicker is that these expenditures are often not accounted for in most budgets, but they can do some serious damage. Add together how much you typically spend on gifts throughout the year as well as the amount you spend on Christmas gifts and divide that annual number by 12 to get a monthly average of what you spend. Then, you guessed it, see if you can reduce that number this year by 20%.

#4: Cell phones

For most Americans, we spend more on a cell phone package for our family than we do on 2/3’s of our monthly discretionary bills. This category didn’t even exist 10 years ago. Now, we don’t think twice about spending $100’s every month for our services. However, this industry is very competitive and good deals can be found. If you stay on top of what your cell phone provider is offering to new customers, you can often take advantage of it, even as an existing customer. Checking on new deals 3-4 times a year could possibly save you a lot. Also, don’t be afraid to change carriers if the deal is right. This has become easier to do. See if you can knock out 20% of your current spending here too.

I’ve found over the years that it’s very common, by reducing these 4 categories in any budget by 20%, we have discovered between $200-$400 a month that we can apply to a financial plan. With an additional $300 a month from the budget going into an investment, the results could be in the hundreds of thousands of dollars down the road! Simple adjustments can reap massive results.

It may be time to take the blinders off and start saving. It’ll be worth it.

Todd Bailey, Owner/Advisor

KRB Financial, 2000 Aerial Center Parkway, #112, Morrisville, NC 27560

919-518-7728, Todd@KRBfinancialNC.com, www.KRBfinancialNC.com

Registered Representative, Securities offered through Cambridge Investment Research, Inc. a Broker/Dealer, member FINRA/SIPC.  SB Financial Group LLC, KRB Financial LLC and Cambridge are not affiliated.