The following is an excerpt from Management Professor Scott Behson’ s new book The Working Dad’s Survival Guide: How to Succeed at Work and at Home.
A few months ago, a financial planner gave a guest lecture to students at my university about the importance of smart financial management right out of college. He talked about his own spending habits when he got his first job. As he drove to work for his first day, he stopped along the way for a Starbucks — after all, he had money now, and he deserved a treat. Later that day, his new colleagues took him out to lunch at a local café. What started as one-off decisions quickly became habits.
Eventually, on his way to work, his brain went on auto-pilot and so he stopped at Starbucks each morning. He never got into the habit of packing a lunch, so most days he went back to the café with a few coworkers, or even by himself. A few months later, it dawned on him that his paycheck didn’t go as far as he’d thought — because he was spending $15 a day due to his unconscious spending habits (quick math: $15/day x 5 days/week x 50 weeks/year = $3,750). This was more than two months’ rent!
I’m not saying you should never treat yourself, and I recognize the incredible awesomeness and indispensability of large amounts of morning caffeine. However, making his own coffee and lunch at home four days a week and splashing out for Friday Starbucks would have saved him over $3000 a year. That’s enough for a weekend getaway, a gym membership or a host of other purchases that are enjoyable and/or create time for family (more on spending money on family time instead of “stuff” in Chapter 10).
Alternately, he could invest or save that money, and then use the accumulated interest to start his own financial consultancy. In fact, this is what he did. This book is not just about family time, after all. The range of our career choices can be enabled or constrained by everyday financial decisions.
I bet a lot of us, myself definitely included, spend little bits of money unwisely. Like a small drip in a pipe, over time, little things can add up to big problems. I never started smoking, but I often say I was too cheap to start. A half-pack a day at $10 a pack (about what it costs in New York State) equals $1,825 over the course of a year. Plus it makes you smell bad and hurts your health. No, thank you.
I know I spend too much on my cable bill and cellphone plans. There are lots of places to economize. Here are some tips from fellow working dads:
• Back when I was a poor grad student, one way I saved money was to never order anything but water to drink when at a restaurant- whether it was McDonalds or Chili’s (which was the upper end of what I could afford then). Three dollar Cokes and five dollar beers add up.
• I have always been — and will always be, I fear — an idiot when it comes to economizing and saving money. But one really smart thing we’ve done as a couple, my wife and I, was to set up my state’s prepaid college tuition program for both our kids- a little bit from every paycheck goes into it, before I have the chance to waste the money, like an idiot.
• We are constantly on the lookout for good family deals — things like “kids eat free” or free drink refills. Groupon has become a friend, as we often organize entertainment around the very good deals you can find on Groupon.
• We just bought a new car, but we drove the last one into the ground over 12 years. The new one will be a 12-year car as well.
• Although I often feel cash-poor, I know we are doing the right thing by making almost all our bills get automatically paid out the day after my paycheck gets direct deposited. It reduces the temptation to spend too much.
• My son and I are sports nuts, but it’s really expensive to go see the Rangers or Mavs. Instead, we go to our minor-league stadium, or better yet our local high school football and basketball games. $5 for me, the kid is free, and $1 sodas and popcorn.
• Our family vacations are mostly spent camping. After the onetime cost of a tent, it’s like 15 bucks a night for a campsite. You could camp a whole week for the price of one night at a hotel.
• I used to buy the latest gadget, phone or game system as soon as it came out. But a used PS3 9 months later is like half the cost. I just had to get over the mental habit of being an early adopter.
• Things aren’t always cheaper at Costco, but certain things, like dog food, diapers and formula, really are. Also, once we got a second freezer for the basement, we could buy our meat in bulk and really save.
I bet if we all went through our regular expenses, we could come up with lots of ways, large and small to reduce our expenses to the point where we’ll have more freedom to choose what to do with our time. Then, we can pour that time into career, family or other life goals. Money is a tool we should use wisely, or else it starts to control us.
Scott Behson, PhD, is a Professor of Management at Fairleigh Dickinson University, and a busy, involved dad. He is the author of The Working Dad’s Survival Guide: How to Succeed at Work and at Home and writes about work and family issues for Time, WSJ, the Huffington Post, and his blog Fathers, Work and Family. Follow him on Twitter @ScottBehson.