Our lifestyles vary from one to another, but I imagine our goals are similar in at least one aspect: We all want to better ourselves. How well we live is determined by our financial success. Some families make less than others but manage to live well because they control their expenses better. Let’s look at real-life ways of “living it.”
To Spend or not to Spend
When you look at the world as a whole, the American way is to spend. That does not mean it is a good thing for you. Your budget should be the money plan that determines your spending. Before making ANY discretionary purchase, I first check my budget, NOT my checkbook balance. Be cautious about random spending and avoid impulse buying.
Too often, credit cards are too convenient allowing you to make unwise purchasing choices. If this is the case for you, you should leave them at home. Budgeting requires determination and a readiness to do without in some cases.
Don’t get caught in being “house poor.” Know anyone that has a fine home, but never dines out? Well, it could be that they are “house poor” in that they have all their money committed to housing costs. Some people are in the same trap with transportation. Driving a very expensive vehicle, yet cannot afford to eat out? Get real! A more reasonable way of life is to round out your lifestyle based on your budget.
Make Your Money Work for You
One of the first places for this to work is your bank account. Be sure you have the right bank account for your situation. Some accounts offer no service charge if you maintain a certain average balance. Other accounts will pay you interest. Shop around to eliminate costs and add income.
With tax projections, you can add money to each paycheck. You can project the amount of taxes you owe and adjust your withholding accordingly. This adds that annual tax refund check to your paycheck each pay period rather than letting Uncle Sam use your money throughout the year. Put this extra money in an interest bearing savings account, and let it earn interest all year for you.
For those of you making quarterly estimated tax payments, be sure that you are setting these funds aside in an interest bearing account. You will earn money until you write your check to Uncle Sam.
Saving $$$ Adds Up
Look around your house, and find ways to save money.
Adding insulation to your attic is one way to save money on utilities. Another way is to turn things off when they are not being used. Most homes can benefit from having storm windows.
To conserve both water AND money, consider running your washing machine and dishwasher only when they are full. This could shave off 1,000 gallons a month. Keeping your showers to five minutes will also save you 1,000 gallons a month. Before you lather up, install a low-flow showerhead. They are inexpensive, easy to install and can save your family more than 500 gallons a week. To save even more, turn off the water while you brush your teeth (four gallons a minute) or while you shave (100 gallons a week).
Look for ways to save using trade offs with yourself, linking your likes and dislikes. Since I love to cook, I explored ways to save money on my grocery bill by doing more of my own cooking (no delivery or frozen pizzas—I make my own). This savings allows me to spend money at the dry cleaner since I HATE to iron.
When I can, I combine convenience with savings (my time is money). What is being wasted around your house but still needs to remain convenient? My daughter tended to waste shampoo, so I poured it in a pump dispenser. Now, shampoo seems to last forever.
Sometimes you need to spend a little money so you can save money in the long run. Take gourmet-cooking classes so you can entertain at home rather than meeting friends to dine out. Spend the money to purchase the equipment to make your own home repairs or maintenance rather than paying someone to do it.
Brown bag lunches save quite a lot of money (and inches on your waistline). Add up those dollars you spend on eating lunch out. Think how much you could accomplish adding that money to your savings.
Take the time to comparison shop before you buy. Think this takes too much time? Do your comparisons on the Web with a search engine to save time, or use a consumer guide to assist with your comparisons, as they’ve done the work for you. You will find savings making wiser purchasing choices.
These ideas will give you food for thought as you begin using your new attitude and living within your budget. For more information regarding this topic or any other tax-related issue, please call Henssler Financial Tax & Accounting Division at 770-429-9166 or [email protected].