5 steps to our dream cottage (5 ways to save)

It's comforting to know that I'm not the only one completely baffled by the rising cost of living. Reading through your comments (thank you all so much!) it became apparent that the expense of day-to-day essentials is a universal concern. Regardless of location or family size, we are all affected.

Last week I embarked on a little project to document how I spend my money (more precisely, where does all my money go?). The results were as I expected:

• Daniel and I spend, on average, $65 a week on coffee (in cafes and takeaway). That's well over $3000 a year. If we buy a slice of cake, some banana bread or convince ourselves that breakfast/lunch is in order, we can easily spend $100+ a week ($5000+ a year) in cafes. 
• A significant amount of our pay goes on groceries - but I honestly believe that I can reduce our fortnightly bill with more forethought (and possibly shopping online)
• When we run out of milk or bread the trip to the shops always results in milk, bread and a few non-essential items that happen to be on sale.
• Bills - the worst kind of mail. Our electricity payment just increased by $50 a fortnight (!) which basically cancels out the reduction on our car insurance and phone/internet bill.

The next step? Creating a realistic budget. Our pay varies greatly from fortnight to fortnight hence it makes sense to work with the absolute minimum income and treat the occasional extra invoice as a savings/spendings bonus. I've been perusing the suggestions made by the Barefoot Investor and I really like his approach to saving - ie. put money into your savings account before you pay any bills or spend any cash, even if it's only $20. He is also a big advocate for living in the now; don't forgo your daily coffee, a celebratory dinner out or a beautiful bunch of flowers just so you can save - otherwise you'll just be miserable. One reader mentioned that her daily coffee is like soul food, a little treat that induces happiness. I wholeheartedly agree - saving is important but today should be lived and enjoyed hence Daniel and I are aiming to find a savings/spendings balance. Our savings goals?

• a little cottage that we can call our own...even if it's 5-10years away.
• private high school education (the public high schools in our area leave much to be desired)

And this is our plan:

1. Buy a coffee machine so we can enjoy a cappuccino at home...but still go out to a cafe a couple of times a week (there's some great espresso machine and grinder advice in the comments section of this post)
2. Shop with awareness - meal planning each and every week
3. Make more food from scratch (I'll save this lengthy discussion for another post but I'm also mindful that making bread/biscuits/crackers/jams every week is not realistic for me right now, and that's ok)
4. Grow food in the garden (currently a work in progress)
5. Allocate a set amount of 'spending' money each week  - and always use cash. Basically, I find it harder to spend cash. Handing over my eftpos card is easy - it's invisible money. My 'spending' cash will go on things like takeaway coffee, flowers, magazines etc

I'm feeling quite inspired about this new take on financial matters and I promise to share my success and failures as I go. I think it's a good time of year to be mindful of money, as Christmas approaches and the spending mayhem begins. This year I'm sticking to my golden present rule and aiming to buy local and/or handmade. Simple and beautiful is my intention. I've also organised a little something for you...three readers will win a truly wonderful children's gift package that will ensure a very affordable Christmas. Stay tuned.

Finally....a little perspective:

• If you have food in your fridge, clothes on your back, a roof over your head and a place to sleep...you are richer than 75% of the world
• If you have money in the bank, your wallet and some spare change, you are among the top 8% of the world's wealthy - found via 4myearth