A few weeks ago, I stood at a downtown Toronto bar wondering if I had enough money to buy a cocktail and tip an 80-year-old drag queen. These are the careful considerations one must make when on the road to financial victory; I was in the midst of “Budget Challenge 2011,” a friendly competition between me and two girlfriends designed to strengthen personal finance habits.
Women face greater financial challenges then men. We tend to earn less, yet we live longer. We need to save more, but we’re retiring with less. Young single women, statistically, tend to be poor savers, according to Emily Rae, a Halifax-based financial advisor. She blames inadequate financial education and raging consumerism.
With this in mind, Jackie, Jey and I chose a figure that fit our lifestyles and entered into a simple covenant: for the entire month of November, we would spend no more than $10 a day ($25 on Saturday and Sundays) on discretionary spending. This included clothes, lattes, iTunes downloads, magazines and anything else that brought joy. This did not include public transit fares, groceries, gifts for loved ones or gifts for 80-year-old drag queens (well, it was her birthday party).
We reported in every morning and debated our purchases. What we didn’t spend, we could carry over. The winner would receive a shopping spree. Just kidding. The winner would receive the ultimate prize of self-satisfaction and a pocket of savings. Here is how it all went down:
On Nov. 1, Jackie fired the starting gun: “I have my $10 in my wallet and no debit or credit card,” she wrote in an email. “Good luck and remember — self-control is our friend.”
“I’m sad already,” Jey replied.
I devised a strategy to tackle my main weaknesses: my love of eating out and my penchant for buying useless crap (like baby-themed napkins for a future baby shower for a friend who had yet to become pregnant). My plan? Avoid stores and cook at home.
Running tally at the end of Week One:
“Damn you, Jackie, and your willpower,” Jey said.
I should have channelled some Jackie-esque willpower myself. I ignored the first point of my two-point strategy: Avoid stores. Instead, I went to Marshalls to buy a birthday gift for my niece. And then I bought Stuart Weitzman boots. And a Soia & Kyo cape coat. And elbow-length scarlet gloves. Total tally: $275.
“You should have called someone!” National Post Books editor Mark Medley said at lunch the next day.
I should have called my support group, yes.
“You have boots. You came to work today in them,” Mark continued.
“But these aren’t sparkly …” I said, trailing off. “Fine. I’ll return the jacket and gloves.”
“Don’t let me make you feel bad,” he said.
“No, no, no. You’re right. Plus, every time I wear it, it’ll be the Coat of Guilt.”
Running tally at the end of Week Two:
Melissa: $179.50 (after returning the coat and gloves)
“Economics is all about satisfaction,” a Financial Post colleague told me. “Right now the satisfaction of buying is more than the satisfaction you get from saving.”
Have kids and then you’ll stop spending, he added. That’s a savings tactic that I would not be trying any time soon.
However, having Shopping Scrooges, I mean, er, “supportive friends” looking over my shoulder helped. Jey sent me this encouraging email after my latest report: “Lis, I think you are missing the point of the budget. Did you need the mug or curling iron? If not, return it!”
The Shopping Scrooges also wouldn’t let me count wine as groceries. Humbug.
Running tally at the end of Week Three:
Four weeks was enough to establish habits, and our personal strategies seemed to be working. We walked instead of hailing cabs. We ordered Coke instead of cocktails.
“The budget got me out of Yorkdale on Sunday without buying clothes or house stuff!” Jey reported. “I caved on the hand soaps (darn you Bath & Body Works and your five-for-$20 deals).”
As for myself, I now regularly cooked at home or brought lunch to the office.
So Jey learned that she has some self-discipline and is extending the personal challenge for another five months. I learned that I am a terrible cook and am using my savings on a culinary arts course. Jackie, however, bought her way out of the challenge: “I went to the West Elm sale this weekend and we won’t talk about how much I spent but it is enough to put me in last place until the rest of the year.”
Jackie: $339 (Unofficial figure before West Elm lapse)
Month’s allowance: $420
Start your own challenge and share your cost-saving tips with @nparts on Twitter (#budgetchallenge).
This article originally appeared in the National Post on Dec. 7, 2011.