Budgeting Tips

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Analyze Daily Spending

Wants vs. Needs: Each purchase every day can be characterized as a want or a need. Needs are necessary for your survival.

Give examples of each: Examples of needs are food, shelter, clothing, transportation to your job, etc. Examples of wants are treats for yourself or others, extra levels of comfort, recreation, leisure, etc. In general, never do without a need to satisfy a want. Let’s evaluate a typical workday.

• What are you buying? How much did this cost?
• How often do you buy it? Is it a want or need? Add up the expenses.
• How much “want” money is being spent in a month and year?
  

Budget Saving Ideas

Banking:

• Does your banking relationship cost you extra money?
• Are you using free ATM machines to withdraw your money when necessary?
• Plan your trips to the bank to meet your cash needs until your next trip if your bank is not in a convenient location.
• Is your checking account a good match for the way you use it or is there a cheaper alternative at you bank or a competitors?
  

Insurance:

• Shop around from several sources.
• Compare apples to apples when considering a switch and buy only what you need.
• With life insurance, consider term insurance for the years you really need coverage.
• When you buy term insurance you are paying a specific premium for a given period of time to provide insurance during that period alone. There is no cash benefit provided unless the insured dies while the policy is in force. Other forms of insurance are universal life and whole life. These types of policies will provide a cash value from income earned on the invested monies but they cost more than term insurance. With auto insurance, keep your insurance agent up to date with your situation. If your driving record has improved make sure he knows this. Look at higher deductibles to save money, don’t have more insurance than you really need or items on the policy you will likely never use. Sometimes you may be able to obtain health insurance more cheaply on your own than you can through your employer. Unless you look around, you won’t find this out.
  

Recreation and Leisure: Ask yourself how often you: Dine Out? Go to a first run movie? Get your haircut, or nails done? Go to a music concert or professional sporting event? When the family does go out, look for promotions (buy one entrée get a 2nd for free, kids eat free, early bird specials, discount movie theatres, off peak rates, coupons, etc) Taking advantage of these opportunities doesn’t make you cheap, it just means you are a savvy consumer

Lunch and Snacks: Do you normally begin each day with a gourmet cup of coffee and a pastry? Do you purchase your lunch from a vending machine because it is conveniently located in your break room or do you go out daily for fast food or a sit down lunch? By planning your lunches and bringing food from home regularly you will save money.

Utilities and Internet: With tremendous competition in the communications industries (telephone companies, internet service providers, cable and satellite TV businesses, and wireless phone companies) it pays to shop around for the best priced products for what you need. Secondly, don’t pay for services you don’t need or use just because it came in the complete package they sold you. Explore why you own a cellular phone and how do you use it? Review your Internet usage and cable TV habits to see if you are spending too much of your time and money on these services. Does the residential long distance service you pay for match your uses of long distance services at home? If you also use a cellular phone, does it provide long distance service for free subject to specific calling times?

Holiday Spending Tips
Don't let holiday gift giving get you down. The following holiday spending ideas can limit the expense of holiday shopping.

Planning Planning Planning. Saving money around the holidays requires having time to shop for sales and budget you income. To stay within your budget, buy only one gift per pay period beginning in September or October. Shop around. Don't assume that every store offers the same price. Be price conscious and look for sales. Try browsing the Internet. On-line shopping may offer advantages in price and convenience. If possible arrange gift exchange with relatives or friends after the holidays to take advantage of post holiday sales and store inventory liquidation.

Establish a budget in advance. Determine how much money to allocate towards holiday gifts and then decide whom to purchase gifts for. This will give you an idea as to how much you are willing to spend on each individual gift. It may help to look at previous holiday bills. Include food, decorations, and travel in your holiday budget. It is helpful to establish a holiday spending account in advance and allocate funds to the account out of every paycheck leading up to the holiday. Plan your shopping. Write out the stores you will be shopping at based upon your list and map out how to get through them without backtracking. Is one of the stores very much above your spending budget compared to the others?

Avoid buying on credit if possible. Try to make it through the holidays on a cash and carry basis. If you do use credit, use the card with the lowest interest rate and try, as hard as possible, to pay off the balance when you receive your billing statement. Freeze your credit cards in your freezer during the holidays or wrap them in a dollar bill so you are reminded that using them could have long term costs.

Keep the gift recipient list to a minimum. When families expand, it can become a tremendous burden to buy a gift for every niece, nephew, in-law, cousin, stepparent, stepchild, grown sibling, teacher, and friend you can think of. Immediate family should come first, and then use more economical means of gifting to others.

Grab Bag and Secret Santa Instead of buying many gifts, pick a name out of a hat. Set a price limit on the gift. Not only will this save you money, it will help to avoid the hassle of having to shop for many different people with many different tastes. By giving gifts this way everybody is satisfied and expenditures and hassle are limited. This approach allows you to focus on one individual and getting them the best possible gift. Grab bag gift giving is another good money saving idea that eliminates hassle and expense.

It's the thought that counts. As opposed to making material offerings, provide a service, which has its own inherent value. Sometimes services are the best gifts to give because their value is appreciated when their need arises. Services to offer are baby-sitting, lawn or garden care, transportation, pet care, car washing, cleaning and maintenance, housekeeping and house cleaning, snow removal, etc. The value of services is apparent long after material gifts have lost their appeal. What’s better ribbon candy or a credit of three child sittings? It depends on the person but child sitting is pretty valuable to parents that need a break.

Keep all receipts in one budget envelope including sales tags

For toddlers and small children, shop at yard sales and start well before the holiday. A good used toy costs a fraction of the brand new version. Recycled music may cost 10% of what a new CD goes for and once you remove the packaging you cannot tell the difference.

Look at dollar stores for stocking stuffers, or bazaars for hand crafted items if you are shopping for someone who really appreciates a craft (but you don’t have time or talent to create it).

Share the kids Holiday list with relatives when they call to ask what the kids want.

Identifying A Spending Problem

Tough Questions to Identify detrimental spending patterns:

• Are your credit card accounts at or over their spending limit?
• Are you paying only minimum payments because you could not afford to pay additional?
• Do you use cash advances to pay bills?
• Do you borrow money from an emergency fund, college fund, or savings account to pay rent, mortgage, a car payment or utility bills?
• Do you purchase groceries and other everyday items on credit?
• Have you been denied credit or asked to cut up a credit card?
• Have you ever been declined on a credit card purchase?
• Are you saving any money on a monthly basis?
• Are you accumulating more debt on revolving charge accounts than you are paying each month?
• Can you account for the total unsecured debt you owe and how many revolving charge accounts are active?
• Do you purchase items and then shortly thereafter return them because you don’t need them?
• Do you buy items on the spur of the moment without any inclination that you were going to make that purchase when you left home today?
• Do you purposely hide bills from family members?

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