02.25.2010 / Tips to Trim Your Spending
Budget. It is a word that all of us know, but sometimes do not know how to stick to it. In many ways a budget is like dieting, we all have good intentions, but sometimes temptations make it difficult. And just like a diet there are tips to help you avoid those temptations and trim your spending in 2010. In fact, with the right moves, you not only improve your finances, but you may also have some extra cash left over to splurge once every so often.
"In many ways a budget is like dieting, we all have good intentions, but sometimes temptations make it difficult."
First of all, there’s never a bad time to start scrutinizing your finances and spending. It’s particularly best at the beginning of the year or right after the holidays. However, if your spending is out of control or you feel insecure about your job and the economy now is the time to really consider these tips. Odds are you’ll be able to save even more than you thought.
So now you ask, what’s the most important tip? Create a budget and keep it simple. In order to stay on track it will require you to not only make sacrifices but to truly evaluate your overall spending. However, consider these efforts are helping you control your small expenses now, so that you can buy a larger ticket item in the future and reach your financial goals.
Tip 1: Track all your spending.
Yes, this may seem like a time consuming task, but it’s the only way to get a handle on how much money goes out your wallet each day. Ideally, you should try and keep track of your spending for at least three months. This will allow you to evaluate all your bills, including those that may not come up each month; such as insurance, doctor’s visits, and household repairs. However, just monitoring for a few weeks can still make a big impact by catching some of those small expenses that add up quickly. For instance, those large coffees you purchase, consider cutting back to one a week. Or how about taking your lunch a few days a week, instead of eating out everyday. Also, creating a list for the grocery store and putting together a weekly dinner menu ahead of time will help you avoid purchasing those extra items at the store- those are the items that we all wonder “How did these end up in shopping cart?”. Also, don’t go grocery shopping when you’re hungry. You’d be surprised how much more you would spend on items you really don’t need when you’re just hungry at the grocery store. Finally, consider using a software system to help you track your spending, such as Quicken (http://quicken.intuit.com), free online or $60 for the Deluxe software version or YNAB, which stands for You Need a Budget http://www.youneedabudget.com which costs around $50 for the software.
Tip 2: Look at items you can cut out.
Ok. We all know that there are probably a few areas where we can truly trim back. Evaluate your spending at restaurants. How many times are you going out for dinner or just for drinks with friends? Consider eating in or have a potluck dinner for friends and family at your house instead. Secondly, is television. Do you really need all 500 channels and that DVR (which is really nice to have)? Consider cutting back your package offer and truly evaluate the extra services you are purchasing from your television provider. As a note, competition in the cable industry has really picked up, so it may be worth asking your provider for a discount or consider changing providers. Last but not least, your cell-phone. Yes, many of us can’t live without it and have turned their cell-phone into their only phone line. However, if you have multiple phones in your household, consider streamlining them together into one plan and/or re-evaluate your plan charges and services. There may be potential savings that you don’t even realize or at the minimum extra services that you get as part of your existing plan that you don’t know about.
Tip 3: Define your goals.
As you start to get your finances in order and realize you are staring to save some extra money each month, it’s going to be important that you determine where this money is going to go. First and foremost, your newfound savings should be used to start paying down any outstanding debt that you owe. Secondly, you should also remember the most important rule in savings- Pay Yourself First. Even if it’s only $50. Set that money aside in your savings account. The more targeted your goals, the more likely you are to achieve them. Consider having funds automatically deposited into your savings account from your paycheck or once your paycheck comes, pay all your bills immediately and then determine how much is left for extra spending. Again, in order for you to truly trim your spending it will require you to make some sacrifices and evaluate your spending.
For more savings tips, go to feedthepig.org, sponsored by the American Institute of Certified Public Accounts. Or, visit americasavesweek.org.
Do you have any helpful savings tips that you can share with our readers? Or, have you tried any of the above tips yourself? Please share.