On that basis, I count anything that increases my net worth as being equivalent to “savings”, except that I ignore everything I call “anticipated expenses”. This means mortgage payments would be as good as savings.

The RESP is more complex. If you ignore it, figuring it will all go to education anyway, then theoretically you have no incentive to maximize it by prudent investment. Conversely, if you do count it, then you’ll face a sudden net-worth drop the day you pay your kid’s tuition, which theoretically is an incentive to prevent your kids from going to college.

We don’t have RESPs set up yet, but in theory, I would take the anticipated education expense, divide it up into monthly payments, and count that against my net worth, while simultaneously counting the balance of the RESP toward my net worth. Whether I will actually do all this remains to be seen…

Potato: Yes, I can do that. I’ll fiddle with this blasted WP Template and get a Mom2KG category going. Thanks for the suggestion.

I agree with Traciatim and your husband — RESPs are fancy tax-friendly ways of amortizing future education costs; they’re an expense, not a part of your savings. Mortgage overpayments might as well be savings, though.

So, still spending more than you’d like? Did you draw up a post hoc budget of where all the money went over the last month? Did you like what you saw? Did you get enjoyment and meaning in your life commiserate with the expenditures? Can that help tweak your future budgets? When you have to spend an extra 6 months working before retirement because you blew half the year’s savings goal on a last-minute trip to vegas, will you think back and say that it was time and money well spent? Only you can answer those questions, and it might spark you to, say, sit down and write down what your long-term life goals are. What sorts of activities fit within those goals? Do you want to live a rich, indulgent life now, and make up for it by working later in life? Do you want to travel the world’s casinos, or is it more important to watch your rugrats run around your feet on your unmortgaged deck?

Remember: everything in life is a trade-off. You can let your wants drive your behaviour, choosing your trade-offs unconsciously, or you can approach it with a long-term plan and make each choice with purpose and foresight.

So far you’ve been taking baby steps, and from the sound of things making some progress, but not as much as you’d like. There’s a great community here to “support” you if you want — you can post the detailed line-by-line budget for your household, and we can tear it to shreds (or in the case of the others, gently support and provide advice). If you need more discipline, you can think to yourself for everything you buy “Can I justify this purchase to Potato, cheap SOB that he is, at the end of the month on the blog? …Maybe I shouldn’t buy this…”

Binge dieting, in general, doesn’t work. However, binge budgeting might be a good experiment for your personal finances. August is coming up: like your husband suggests, can you go one month living totally frugally? Can you set a firm but realistic budget and stick to it? Can you take out the amount you think you’ll need to live on in cash, and go without charging anything? No movies, no dinners out, no alcohol, no cocaine parties in the hot tub? Not even the whole month: give yourself the long weekend, but from August 5-31 can you “deprive yourself” of just about everything? If you run out of your allotted withdrawn cash, can you stop spending entirely and start going through the canned soup in the cupboard until September comes? Just to see what it’s like, to see what you really do miss, and how much money you have left over for your savings goals? You already know what it’s like to indulge yourselves and go over budget, why not take a month to see what it’s like to go the other way?

An aside to TMW: could you set up Mom2kG with her own category rather than file her posts under “misc” and “uncategorized”? I like going back to the old ones to see what’s happened in the intervening months…

As for savings, the question back to you is how much do you think you would require if a “real” emergency happened? E.g., if one of you was unable to work for a year. Along those lines, take care of the insurance asap – think of the children!

As for what do with “excess” money after you’ve topped up your emergency savings, I’m with the school that says you should pay down the mortgage first.

If you must put your money into investments, please don’t consider purchasing rental property without doing more research – sure it sounds sexy, but the potential to get burned is huge. Think slow and steady! Putting your money into index funds/ETFs is the way to go to avoid huge management fees or spending time picking individual stocks.

Not really sure what the angst is about – plus without some actual numbers it’s impossible for the readers to offer suggestions as to where to make cuts.