Budget Tricks

Budget Tricks: Lessons Learned from the Money Diet

Do you need a kick in the pants to get your finances in order? There’s an easy solution – the Money Diet. It turns out the money diet concept has been around since at least the early 1980s and has several iterations. But it’s a pretty basic concept: Don’t buy anything you don’t need! I launched a two-week program and lived to tell about it.

Under the money diet, I could only purchase essential items. Most of my bills, such as utilities, insurance premiums, and fitness memberships are automated. So my money diet became the G&G diet (Gasoline and Groceries.)  My first money diet was in 2012, when I needed to restore my discipline to prioritize my outlandish goal of paying off my mortgage in record time. Since then, I’ve occasionally thrown in a money diet when my credit card bills sneak up to higher than budgeted levels.

The Challenge of Social Activities

As a result of this week’s experiment, I have become super-conscious of my spending habits. I learned that a strict money diet is impossible to attain for any period of time, but it is an excellent tool to becoming a conscious spender (and saver). I will give the money diet one more week and report back.

I broke the money diet in my very first week. I spent $40 on restaurant meals and $50 on expenses associated with income development—a total of $90. Despite the breach, I’m calling it a success.

As a way to limit my grocery bill, I purchased enough Trader Joe’s gift cards to pay for groceries until the next credit card billing cycle. But as luck would have it, I had an unusually active week that resulted in some relaxation of the diet. Results were mixed:

  • I used my gift cards to purchase extra groceries to entertain friends at home on two occasions. This leaves me with $250 to spend on groceries over the next two weeks.
  • I spent $40 at two local restaurants dining with friends. I seldom dine out and it was important to spend time with both individuals. I kept the bills reasonable by using a Groupon and avoiding beverages.

While I did not adhere to the strict Gasoline & Groceries mantra, I am pleased with the relatively low amount spent on non-essentials ($40). I did not take any unnecessary shopping trips and avoided using the one-click option at Amazon. The week was not perfect, but both social events were worth breaking the strict budget demands.

A “Fun Bucket” is a Necessity

The two-week money diet made me aware of expenses that I incur for entertainment, social activities and gifts. The purchase of several gifts threw a wrench in my money diet, as did visiting with friends over lunch dates. Yet, I’m not willing to give up gift-giving, social events and entertainment on a permanent basis. The challenge of living within a strict budget is that the discipline can wear a person down. One begins to feel resentful and in a weak moment, the credit card eventually comes out for an extravagant purchase—just to feel better.

The “bucket” strategy works for me and I am now set on creating a “fun bucket.” I will put aside a small amount of money every month into my ING account. When a terrific Groupon offer on entertainment comes along, I’ll have the money available and be able to enjoy the activity guilt-free. When a friend invites me to lunch, I can gladly say “yes,” and know that the expense will be covered. I am looking forward to the “fun bucket.”

Was the Money Diet a Success?

By strict standards, I failed on the money diet. I spent money on restaurant lunches and gifts—I broke the diet. However, I consider the “money diet experience” to have been invaluable. It made me conscious of each spending decision and it revealed gaps in my current financial strategies. Here’s why I call the money diet a success:

  1. The advance purchase of Trader Joe’s gift cards to limit my grocery bills worked well. I focused my grocery shopping on items that I needed for the upcoming week. I cut down on the amount of food that had to be discarded at the end of the week. It was also reinforcing to know that my monthly grocery bill was paid in advance.
  2. I had to stop hoarding funds in my “baskets” and begin to use them as they were intended. Instead of digging into my emergency savings fund or breaking my budget to pay for home improvement expenses, I tapped into the home improvement “basket.” This kept my budget goals intact.
  3. I realized that I needed a “fun basket” to truly enjoy entertainment opportunities and spend quality moments with friends and family. It’s important to maintain social relationships and to have fun. A separate “bucket” will allow me to experience guilt-free spending that enhances my social life.

I highly recommend the money diet. In addition to helping you cut expenses, the money diet requires you to become a conscious spender. It will help you prioritize your spending and you’ll likely discover new strategies that help you accomplish goals that align with your values. Give it a try!

About the Author Brenda

Dr. Brenda is a sociologist, educator, blogger, motivator, and financial coach. In addition to blogging at The Five Journeys, she writes 30-day challenges at BetterLifeChallenges.com. Her passion is guiding people on their journey to financial freedom through coaching at DrBrendaMoneyCoach and online courses at EarlyExitAcademy.com.

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