What To Do When

Reducing Expenses

Money Saving Tips 

While reviewing your budgets you probably found categories where your expenses were higher then you would like. The next step is to dig into these categories to determine if there are ways to reduce costs. Don’t try to make too many changes at once or you will get overwhelmed. The following pages contain dozens of money saving tips. Just pick one or two things to work on at a time. Then, keep chipping away at your expenses over the next year or until you are satisfied that they are as low as possible. The goal is for you to identify wasteful spending that is not creating any real value for you. The higher the category expense the more you can potentially save, so start with the big ticket expenses first.

Try to be keenly aware of the choices you make and make sure you are choosing what you really want. For example: you would love to take a weekend vacation with your spouse for your anniversary but you never seem to have enough money. Put the vacation in your budget and plan for it. Then, don’t give up that money for something that is not as important to you, such as: letting friends talk you into a dinner at an expensive restaurant, buying something a co-worker is selling just to be nice, or letting the kids have an extravagant birthday party every year.

In our society we are bombarded with advertising. Businesses have marketing departments that specialize in how to get you to part with your money. We are confronted with opportunities to spend money everywhere. Stores are open 24 hours a day, seven days a week. There are shopping networks on television, and you can buy any product on the internet. If you don’t have any cash, you can just whip out your credit card. Your thinking needs to shift from a materialist mentality to a money saving mentality. Every purchase you make is a choice to spend now and forgo paying off debt or saving for your future. Now that is not to say that you cannot have occasional splurges. As a matter of fact, the long-term goal is for you to be able to afford to splurge more often.

 For some people it seems very un-cool to budget. You want elegant furniture, stylish clothes, and a sleek car.  You want to eat out frequently, live in a large house, and take exotic vacations. Everyone likes nice things and there is nothing inherently wrong with any of it. It becomes a problem when you purchase these things and you can’t really afford them. Your budget will tell you what you can and can’t afford, but here is a great rule of thumb.

 If you have to charge it or get a loan to pay for it, you can’t afford it. There are three exceptions – your house, your car, and your education. This may seem a little extreme, but until you stop going into debt you will not get ahead financially.

You may be thinking that this is too strict of a rule and you have already decided that it doesn’t apply to you. Don’t blow off this advice – it is too important. The people who get ahead and stay ahead do not take debt lightly. You don’t want to be the person who looks back ten years from now and realizes that you were wrong. Another way to look at it is – if you charge something and can’t afford to pay the bill in full you will have to pay interest, which is like paying 12% extra for the item (or whatever your interest rate is). You can’t get ahead paying 12% extra. This brings us to the second rule of thumb.

 Live within or below your means. Contrary to what you may tell yourself a new house, a better car, or designer shoes, will not make your life better. Not having to worry about money is more likely to bring you peace and happiness.

In their book, The Millionaire Next Door, Thomas J. Stanley and William D. Danko, said it best. “It is unfortunate that some people judge others by their choice in food, beverages, suits, watches, motor vehicles, and such. To them, superior people have excellent tastes in consumer goods. But it is easier to purchase products that denote superiority then to be actually superior in economic achievement. Allocating time and money in the pursuit of looking superior often has a predictable outcome: inferior economic achievement. What are three words that profile the affluent? Frugal Frugal Frugal.”

Now don’t confuse Frugal with the derogatory term Cheap. Frugal just means that you are not wasteful. You carefully consider a purchase before you buy.