Today’s column continues our series of up-to-date tips and reports which will help a family prepare a reasonable, affordable financial plan with a goal of achieving financial freedom.
In the last column, Why Do I Need a Budget (Part One), we addressed the effectiveness of a budget as a first step in starting to take control of you financial situation. We discussed the first two of four steps in preparing a budget: keeping track of your daily spending and determining what your monthly income and expenses are the month before they are due. Today we will look at the other two steps you need in developing your budget: finding ways to decrease spending and finding ways to increase income.
Step 3: Find ways to decrease spending – If your expenses are more than your income or if you want to save more money, you need to consider ways to cut back on your spending. As you decrease your monthly spending, you will increase the amount of money you have left each month. This is also referred to as “increasing your cash flow.”
TIPS TO HELP YOU DECREASE SPENDING OR SAVE MORE MONEY
- Carry only small amounts of cash in your wallet so you will not spend it.
- Use direct deposit for your paycheck or federal benefits, such as Social Security (see “Myths and Facts about Direct Deposit” in the next paragraph).
- Control your use of credit cards.
- Do not go shopping just for fun.
- Take your written savings goals with you as a reminder.
- Buy only what you need – do not buy things just because they are on sale.
- Use coupons to save money.
- Use a grocery-shopping list to prevent impulse buying.
- Take your lunch to work instead of eating out.
- Shop around to get the best deal on big-ticket items such as cars and appliances.
- Pay your bills on time to avoid late fees, utilities being turned off, eviction, repossessions, and the costs of a bad credit rating.