Savings mean more than what you earn

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FINANCIAL advisers worth their commissions will remind you the size of your nest egg depends more on what you save than on what you earn.

Sure, salary matters along with investment performance. And those two topics are much more fun to talk about than the mind-numbing details of everyday spending.

And who wants to relive the guilt trip after splurging on those snazzy Manolo Blahniks at the shoe salon?

Not me. Going to a suburban Detroit shopping mall with my mother is my earliest childhood memory. During college, my father once called my dorm room to ask who Ann Taylor was and why he was putting her through college.

Throughout my husband's 11 years of post-college medical training, we spent more than we earned, as do about 40 percent of Americans, according to the Federal Reserve.

Turning around the spending ship hasn't been easy and is a work in progress, so I'll spare you the sermon from the newly converted.

I can tell you, though, that it takes more than organization to get you saving the recommended 20 percent of gross income. Tracking daily expenses down to the penny is a highly useful tool for creating marital problems and nausea-inducing boredom, but it won't completely resolve spending problems.

You have to follow up the expense tracking with some realistic guidelines for change.

When the Family Financial Network polled consumers in various income groups about what advice they wanted, help with household budgeting led the list of priorities that cut across all incomes, said Jennifer Openshaw, chief executive of the publishing company.

"People are really strapped today," she said. "They're feeling the effects of rising health care costs, and education and housing costs are going through the roof."

Openshaw just published a new workbook and CD-ROM called the Quick & Easy Budget Kit.

For about $20 (less than half the cost of full-service household finance management software, such as Quicken), a user can create a simple household budget. The product is vastly scaled back from the Quickens of the world; you don't keep your checkbook and manage investments with this.

But it does offer guidelines for spending less.

The kit lets users indicate how much flexibility exists in each category, then tallies that savings over a year. The kit also includes figures on what other Americans spend on various items, but they're reprinted from the Labor Department's Consumer Expenditure Survey, which can be found for free at

What none of these programs will do is accompany you to the store and wag a finger if you start to spend beyond your means.

A lot of spouses will do this for free, but I was hoping to avoid that.

At our house, everyday spending on food and household supplies seemed like the category most out of control, but I had no basis for comparison. Linda Humburg, a supervisor at the Consumer Credit Counseling Service of Family Means in Minnesota, set me straight.

"You should be able to run a household for between $200 and $250 per person per month," she said. That's for families. Singles and couples run a little higher because many of their basic costs aren't that much less than those for a couple with kids, she said.

That includes "anything you stand in line to pay for," which means all food, gasoline, household items, entertainment and those mysterious uncategorized ATM slips.

The Agriculture Department says it takes about $475 a month to feed a family of four a nutritious diet.

Those are tight figures, but they give you a benchmark, and Humburg suggests making a family activity out of it.

"Put the budget amount on the refrigerator for a two-week period, and every time you spend, subtract it from the total," she said. "It forces couples or families to discuss spending decisions. Eventually, it becomes habitual."

E-mail Janet Kidd Stewart at

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