Resolve to reduce wasteful food bill
One couple saved an extra $7,600 in one year — you can too if you put your mind to it
In 2011, Caroline Cakebread and her husband from Toronto had a lofty goal: get rid of their mortgage in five years. With no pay raises or lottery wins in their future, their only choice was to hack away at their spending.
“When we looked at our budget and we tracked our spending, we realized a couple of things we were spending foolish amounts of money on,” says Cakebread, who is editor of Canadian Investment Review and a money expert for Chatelaine magazine.
The main culprits? Their weekly takeout habit, high mortgage rate and wasteful grocery list. “It’s funny, so much of it had to do with food,” she says.
“Allow yourself things you enjoy, but limit them so you appreciate them more and you can realize those savings.”
LAURIE CAMPBELL
CEO, CREDIT CANADA
At the time, their daughter was turning 2 and their son was 3. They were both working full time, coming home exhausted every night. Dialing in dinner was just so easy. They had no idea how much they were spending.
“It didn’t seem like a lot at the time; we were ordering only a couple of dishes and kept them really cheap, like $20. But when you add it up, it’s a huge amount of money. And it is really surprising,” she says.
The couple was spending at least $100 per week on takeout alone. Cooking meals at home meant more work, but it also meant $5,200 back in the bank that year.
If they wanted their no-takeout plan to work, following a strict meal plan would be essential.
By sticking to a grocery list instead of shopping on the fly, the couple saved an additional $200 per month, or $2,400 per year. They didn’t stop there. They spoke to their mortgage lender to negotiate a better mortgage rate, saving them an additional $4,200 that year.
In all, the couple was able to put an additional $11,800 on their mortgage that year, simply by chopping their spending.
Stephanie Lewis is in a different financial situation but just as eager to save. The recent college grad from Toronto puts $40 in an envelope marked “groceries,” $25 in one marked “tokens,” and so on. She does this every week on the day she gets paid.
“I don’t make a ton of money and it goes fast when I’m not paying attention. It’s how I keep my spending in check,” says Lewis.
With high rent costs and a hefty student loan, she says finding extra money is tough, but possible. Like Cakebread, she also tackles food costs first.
“I love going out eat and so do all my friends, but it’s really expensive if you do it all the time,” she says. “I still go out, just not as often.” Instead, the 28-year-old tackles her student loan while stashing a little away in a savings account.
Across the board, Canadians aren’t saving as much as they should. Statistics Canada pegs the household savings rate at 5.4 per cent, virtually unchanged from last year.
What are we doing instead? Spending. According to Canadian credit bureau TransUnion, we’re doing it in record numbers.
“The average Canadian consumer’s total debt is expected to rise 4 per cent in 2014,” said Thomas Higgins, TransUnion’s vice-president of analytics and decision services, in a report.
That means, by the end of next year, the average Canadian is expected to hold $28,853 worth of debt, excluding mortgages.
The good news is delinquency rates are down, which suggests Canadians are managing their debt better. But it also means more of us are putting money toward debt instead of our savings accounts.
One way to find money to save or to chip away at that ever-growing debt is to cut back on food costs.
This can pose a challenge as the price of food worldwide is on the rise. The UN’s Food and Agriculture Organization suggest meat prices and cereal prices are at an all-time high.
What’s more, some of the food we buy will never reach our plates. Statistics Canada suggests only 71 per cent of food purchases are ever consumed.
A 2010 study called Food Waste in Canada, conducted by George Morris Centre, a Canadian agricultural think tank, suggests an estimated $27 billion worth of wasted food in Canada ends up composted or in landfills every year. Laurie Campbell, CEO of Credit Canada, a non-profit debt solutions company, says we’re also paying way too much when we grab on the go. “People spend a fortune on food. It’s lunches, coffees, snacks. “We’re nickel-and-diming ourselves to death. Go ahead and buy those snacks, but buy them in bulk [instead of on impulse] to save you money,” says Campbell. “Allow yourself things you enjoy, but limit them so you appreciate them more and you can realize those savings,” she says. Campbell suggests instead of brown-bagging your lunch five days per week, let yourself buy lunch on Fridays. “But if you do that, make sure you take the money that you were spending on lunch and put it in a savings vehicle,” she says. “It’s not about just saving that $7 on lunch four days per week. You have to put that money away and you have to have a goal around it.” Savings goals can help you stay focused and motivated.
It could be a trip, retirement, paying down that credit card or getting rid of your mortgage.
Cakebread and her husband are still chipping away at theirs.
“We’re certainly working at it. Financial goals always shift and change from year to year based on your goals and on your life.
“What I will say is we’re in a lot better financial shape then we were,” says Cakebread.
“I think what we learned,” she says, “is that staying on top of your spending is as important as the saving side of your picture.”