Establishing and living by a budget is always necessary, but in difficult economic times it is by far the most important thing you can do to make sure you live within your means and avoid falling back into credit card debt. Your FFEF counselor is always ready to offer support and suggestions to help you allocate your money to your most important needs.

Establishing a Budget

Do you cringe when you hear the word “budget?” Do you resist the idea of recording expenses and tracking spending? Once you start, you will be surprised to find that it can be fun. You’ll know exactly where your money is going every month, and you’ll be surprised to find how taking charge of your money will help you be more disciplined in other areas of your life as well. People who are in control of their finances are people who can plan ahead for needed cash and reserve money for foreseen as well as unforeseen circumstances. They organize their finances in much the same way that businesses do their financial planning. They stop living paycheck to paycheck. One of the greatest benefits of living by a budget is not financial. It is emotional. There is an enormous psychological lift given to those who think through their financial needs and establish a budget to get where they want to go.

A budget doesn’t mean you have to stop doing the things you like to do. It might for a little while, but as you manage your money better, you will find you have more money available to do the things you want.

Money will not manage itself. A commitment must be made to establish and live by your budget. Here are the basics for getting your budget in place:

• Record everything you spend. It can be in a pocket-size notebook or on a computer. The important thing is that it’s in the place that works best for your lifestyle.
• Use budget forms. These can be found at your local office supply store or even at the library.
• Pay your bills all at once or at every pay period. Having a regular time set aside for sitting down and paying bills helps you avoid late payments and costly additional interest.
• Keep your check register current, and balance your checking account monthly. Forgetting to write down what you spend and deducting it from your account balance can result in costly overdraft fees.
• Include something you like to do in your budget as a reward. All work and no play really does make Jack a dull boy so include an economic reward in your spending plan. It can be as simple as a movie rental once a month.
• Involve family members. Living within a budget is the responsibility of everyone in the household. If one person is sticking to the budget and another is not, the benefits of budgeting are greatly diminished.
• Ask for help. Learning to control your finances is not an easy task. It gets more complicated all the time. Don’t be afraid to ask your FFEF counselor or someone else you trust to help you put this critical habit into practice.

Creative Ways to Reduce Spending

Whether the country is in a recession or not, rising prices are certainly making it harder for people to live within their means. It may take a little more creative thinking to find ways to keep expenses under control. Sometimes it’s the little amounts we save here and there that add up to the difference we are looking for.

Here are a few ways to make cuts in spending that could add up to $100 or more in savings. We hope they will motivate you to spend a little time finding other ways you can trim down costs. A few hours spent brainstorming ways to save is time well spent.

1. Water Is a Perfect Drink

Have you convinced yourself that you have to have flavor in your drink? While drinking nothing but “cool, clear water” right from your kitchen tap would be the ideal way to save the most money, that’s probably not going to happen. But if you reduce the amount of flavored drinks you consume, it can save you quite a bit of money over a year. Try making a point of drinking three glasses of water a day. It will reduce the need to drink as many purchased drinks by making you feel less thirsty during the day. If you can reduce the amount of purchased drinks that cost $1 by just three drinks a week, you have saved more than $150 a year. Plus, if you’re used to running to the convenience store when you need a soda, you’ll save on gas as well.

2. Compare, Compare, Compare

This one takes a little extra time but when you have a few extra minutes a day but not a few extra dollars, the time spent is worth it. The Internet has helped people a lot when shopping for the best prices on things like auto insurance and interest rates. But you can also use it for everyday items. There are many sites that have done the price research for you and display it in a comparison chart. This can be especially helpful if you have over-the-counter needs like allergy medicines or other medical supplies. You can often get free shipping on your purchases if you spend $25 or more so you save on gas as well and the time you save going to the store makes up for the time you spend doing the research. Once you find the sites you like, your weekly time spent researching quickly reduces. If you don’t have the Internet at home, make a visit to your local library.

3. Check Out the Coupons

Many people don’t want to spend the time it takes to gather and organize coupons, but it only takes a short time to check out the ones that come in the newspaper or in the mail, and the truth is you only have to use $2 a week in coupons to save more than $100 a year. Make sure you only save the coupons for items you already use and will purchase again. Don’t be tempted by coupons for things you don’t need. And don’t forget about coupons for things that go beyond the grocery store, for example, pizza, oil change, and haircuts. You’ll soon become a pro, and it won’t take much time at all to save a lot for little effort.

4. Cheap Treats

Just because you’re trying to spend less money doesn’t mean your need for a treat now and then is going to go away. Besides, a little treat is a great morale booster. You don’t want to spend a lot of time in the recession doldrums. Look around for ways to enjoy a treat—on a budget. For example, an ice cream cone at the fast-food window is a lot cheaper than at the ice cream specialty store. Grocery stores often put candy bars on at special prices. If you’re careful, you’ll never have to pay more than 33¢ for a candy bar if you only buy them when they’re 3 for a $1.00. Merchants are feeling the economic pinch as well so keep your eyes out for the good deals, and if you have budgeted carefully, you’ll be ready to take advantage of the savings.

5. Cold Water Cleans as Well as Hot Water

Contrary to what some people think, it is no longer necessary to wash everything in hot water to really get it clean. Soap and detergent do the sterilizing for us that could only be achieved by hot water in days gone by. Unfortunately, many people don’t realize that and continue to spend unnecessary money on heating hot water for their washing machine. The biggest cost of running a washing machine is heating the water—up to 90% of the cost.

The advances in washing machines and detergents mean that only the dirtiest and greasiest clothes now need hot water to get clean. Setting your washing machine to a cold wash/cold rinse cycle instead of hot wash/cold rinse will have little impact on how clean your clothes get, but it will save you as much as $100 to $150 a year. It can be even more than that if you have children.

6. Stay-cations can be just as fun as expensive travel destinations

While it’s always fun to dream of a trip to Hawaii, or check out the old towns of Italy, you can have just as much fun relaxing at home. Plan some time away from work and check out everything your hometown or county has to offer. Visit the local water park, pack a picnic and take a hike for the day, check out a local or state fair, look into getting a city pass and get discounts on your museum and zoo visits. You could plan an outdoor paint party, or stay up late and watch a meteor shower. Try sites like roadtrippers.com or roadsideamerica.com to find unique and odd tourist attractions near you. You could also try out geocaching.

7. Find free learning online. 

There are so many things to learn from the internet. You can watch YouTube tutorials and find a new hobby, pick up skills with a new software, and even watch free old movies and local productions of broadway plays. The Library of Congress loc.gov has a digital collection that could keep you busy for months. Many universities also offer free online courses you can take just for fun as well. Travel sites are also fun, learn all about a new location anywhere in the world with pictures, videos and local customs.

Family Financial Education Foundation has a group of skilled counselors to help you get your budget to a better place. Give us a call at 877-789-4172 or contact us on our website at www.ffef.org for more information on how we can help.