Classic frugality programs rely heavily on numbers. People who like numbers take to these programs like teenagers to texting. To them, budgets and ledgers and spreadsheets provide endless sources of delight. But then not everyone digs digits.
If you haven’t tackled your household spending in a serious way before, maybe it’s because of the tedious mathematics involved. If so, hear this: the Spend Less Now! program deemphasizes numbers and lets you focus instead on strategies that save you money fast. Now, I can’t promise you that SLN! eliminates all math completely and forever. After all, we’re dealing in dollars and cents here. But thanks to SLN!’s checklists, you can get a long ways down the road of frugality with limited numeric fuss.
Let’s begin by looking at one of the most basic building blocks for spending less: the ever so humble line item.
Every year your household completes hundreds of transactions, each of which generates a receipt or other record of payment. My own receipts for 2012 are shown above. There’s more than 650 of them. The sheer volume of faded thermal paper looks daunting—even to a devout frugal fringer like me.
But no matter how big your own pile of receipts might be, there’s good news. Your number of transactions is finite. And there’s a good way to make that number even more finite: assign each receipt to a discrete spending category such as groceries, restaurants, gasoline, internet, movies, auto insurance, rent, mortgages, and so on.
I call these expenditure categories “line items.” For most households, all spending can be organized into 60 or so of them.
The federal government uses line items when it studies household spending. Since 1980, the Bureau of Labor Statistics has published an annual Consumer Expenditure Survey (CES). The CES reports the consumption habits of 7,000 “consumer units” (bureau-speak for households) in dozens of spending categories.
The chart below lists the CES’s “major” line items, which appear in bold text. In some instances, these are split into “sub” line items, and in some instances they’re split up even further. Take a moment to look over the chart. I’ve stripped out the dollar figures so that you can focus only on the line items themselves (for now, we stay away from data).
|2011 CES Line Items|
|Food at home|
|Food away from home|
|Mortgage interest and charges|
|Maintenance, repairs, insurance, other expenses|
|Utilities, fuels, and public services|
|Fuel oil and other fuels|
|Water and other public services|
|Other household expenses [including trash & internet]|
|Laundry and cleaning supplies|
|Other household products|
|Postage and stationery|
|Household furnishings and equipment|
|Apparel and services|
|Vehicle purchases (net outlay)|
|Gasoline and motor oil|
|Other vehicle expenses|
|Vehicle finance charges|
|Maintenance and repairs|
|Vehicle rental, leases, licenses, and other charges|
|Public and other transportation [including airfare]|
|Fees and admissions [including club dues]|
|Audio and visual equipment and services [including pay TV]|
|Pets, toys, hobbies, and playground equipment|
|Other entertainment supplies, equipment, and services|
|Personal care products and services|
|Tobacco products and smoking supplies|
|Personal insurance and pensions|
|Life and other personal insurance|
|Pensions and Social Security|
The CES shows you just one way to view household line items. You can change it however you want. Remove whichever line items you don’t incur and add in whichever ones you do. If you want, you can also split up broad categories into smaller ones in order to identify and address any specific areas of overspending. For example, if you want to focus on vacation spending, you can break it down into airfares, lodging, rental cars, and road food (see Spend Less Now! at Chapters 15-18). If you want to cut down on your spending for automobiles, you can create line items for maintenance, repairs, loans, gasoline, and depreciation (see Spend Less Now! at Chapters 38-42).
So here’s the official takeaway from today’s post: you don’t have to be a “math person” in order to control household spending. Even if you’re the most numbers-phobic, liberal arts-loving individual on the planet, you can still commit yourself to think about spending in terms of line items. Once this happens, it becomes much easier to spend less than you do now. After all, any big job—including any reset of household spending—gets more doable when you break it down into smaller pieces. And it certainly takes less effort to review 60 line items than it does to fumble through 650 faded receipts. The ever so humble line item is your basic unit of household fiscal analysis even if you dislike digging into numbers.