70% Incremental - keep the change
Years ago, Bank of America© began a Keep the Change savings program. The premise was that every purchase total would be rounded up to the nearest dollar and the rounded-up funds are deposited into a savings account. (Example: $3.78 purchase, $.22 transferred into savings, $4.00 total debit) The program provided a strategy to jump start the habit of savings – particularly if consumers feel like they don’t have enough to save. It was also a method to test, and prove, that even small and consistent deposits could add up to a lot in the long run due to compound interest.
Last week, I shared my budget challenges and revealed that I had very important decisions to make regarding groceries. The revelation was difficult to admit, however, the results have been positive for future planning. Recall that I embarked on a 3-month challenge to reduce my grocery bill by 50%. Here are some of the results for October.
Spend target: $500.00
Total spend: $512.11 ($12.11 over target or 2.4% over target)
Spent on groceries: $409.98
Total invested: $102.13
The second part of the StudioM principle is 70% incremental. “70% - Incremental - Where can small changes now lead me in the future? Define action steps and the ‘why’. Instead of plugging in an amount to be deposited into my investment account, I decided to further challenge myself to save money. With the ‘keep the change’ strategy in mind, I invested the unused portion of the $500 spend target. This is how it worked. I set aside $125.00 each week for groceries/food. I generally grocery shop around the same time each week to properly plan for the upcoming week. Whatever money remaining from the $125 by Sunday evening was earmarked for transfer. No matter the split between spending and investing, the total spend for each week was $125. I did not reward myself for going over. For October, exceeding my budget by $12.11 was a loss. On the flip side, I take great pride in investing $102.13. Will that amount set my investments on fire immediately? Nope. But that’s not the goal. The goal is to regularly and thoughtfully spend now as I invest and plan for my future.
I am in month #2 of my grocery challenge. I selected two different stores than the ones I shopped in throughout October to compare prices and meal planning options. My weekly allowance and challenge remain the same. Stick around next month to see how we progress. Progress is being made!!
Stay tuned for the 100% vital next week. Instead of reminding you of the 50/70/100 principle, I will just say… until we meet, keep working on the change.