Many families in today's economy find it difficult to live within their means. Usually the problem is easier to resolve by cutting back on spending rather than increasing income. Here's a list of simple ways to cut back on some regular family-related expenses:
- For one month, keep a detailed spending diary of all expenditures, no matter how small. Seeing it all in black and white can be eye opening! Just buying a latte' at the local espresso cart each morning, can easily cost as much as $720 per year. (I can think of better things than a cup of coffee to spend $720 on ... and I LOVE my morning latte'!) Little expenses add up to big numbers quickly, if done on a regular basis.
- Don't make snap decisions. Wait at least 24 hours before making a purchase. This will give your emotions a chance to cool off so you can evaluate clearly whether you need the item, or not.
- Clarify your personal priorities by writing out a brief mission statement for your life. Then evaluate every purchase in light of your personal life mission.
- Stop using credit cards for general purposes.
- Get out of debt. One out of six American families who buy on credit, have an excessive debt problem. It is usually the result of overspending, not from insufficient income.
- Do you have trouble keeping to a written budget? Try the envelope system. Figure out how much money you need each month for the different categories of expenses (food, clothing, gasoline, bus fare, etc.) and place that amount of cash in separately labeled envelopes. You'll have a concrete visual aid to show exactly how much money you have left to spend in each category, and you will see clearly that if you borrow cash from another envelope, the money is now gone from that other category. This is a great system for people who tend to think that as long as there is still a positive balance in the checkbook, they can keep spending money! (This one idea has done more to revolutionize our family's financial picture, than anything else we've ever done! We actually got this idea from a re-run of an old "That Girl" episode, believe it, or not.)
- Avoid recreational shopping if you have a tendency toward impulse buying. Find other less expensive, and less tempting, ways to have fun. If you go window shopping, leave your cash, checkbook, credit cards and cash machine cards at home.
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