Getting Spending Under Control
If your income doesn't cover your expenses, you must either cut your expenses or increase your income. It's usually easier to cut spending than to increase income. You don't need to make drastic changes, but you must make some effective cuts that will allow you to pay your bills.
First, cover the bills you must pay (mortgage, utilities, loan payments) and money for necessities (food, clothing, insurance). Then, focus on non-essentials - areas where it will be relatively painless to cut back.
Easy ways to cut expenses
The following are some simple ways to cut expenses. They also work if your bottom line is positive.
If you visit restaurants and order take-out often, consider "brown bagging" lunch and saving restaurants for special occasions.
You can reduce a "fixed" expense such as your electric bill by conserving energy. Make sure all lights are turned off when you leave a room. Switch to small screw-in fluorescent bulbs can also save you money. Their initial cost is higher than regular bulbs, but they last at least five times as long and use only about 40% as much electricity. Each bulb can save you $50 or more over the course of its life. If you add up how many bulbs you have in your home, the savings becomes significant.
A bagel and coffee on the way to work every morning can cost as much as $4 per day. That's more than $1,000 per year. If you're married and your spouse has the same habit, it's more than $2,000 per year. Have breakfast at home.
If your income doesn't cover your expenses, you must either cut your expenses or increase your income. It's usually easier to cut spending than to increase income. You don't need to make drastic changes, but you must make some effective cuts that will allow you to pay your bills.
First, cover the bills you must pay (mortgage, utilities, loan payments) and money for necessities (food, clothing, insurance). Then, focus on non-essentials - areas where it will be relatively painless to cut back.
Easy ways to cut expenses
The following are some simple ways to cut expenses. They also work if your bottom line is positive.
If you visit restaurants and order take-out often, consider "brown bagging" lunch and saving restaurants for special occasions.
You can reduce a "fixed" expense such as your electric bill by conserving energy. Make sure all lights are turned off when you leave a room. Switch to small screw-in fluorescent bulbs can also save you money. Their initial cost is higher than regular bulbs, but they last at least five times as long and use only about 40% as much electricity. Each bulb can save you $50 or more over the course of its life. If you add up how many bulbs you have in your home, the savings becomes significant.
A bagel and coffee on the way to work every morning can cost as much as $4 per day. That's more than $1,000 per year. If you're married and your spouse has the same habit, it's more than $2,000 per year. Have breakfast at home.
If you smoke, think about giving up smoking. Besides the health benefits, you could save over $1,200 per year by quitting a pack-a-day habit.
Getting out of debt is tough. It also takes time. Most people need a year or two to escape from debt, but you can do it if you stick with it. Remember, the discipline and techniques you learn by solving your problems will benefit you for the rest of your life. Getting out of debt feels great. Staying out feels even better.
The Smartest Method to Save Money: Have a Spending Plan
The very best method to saving money is to create a Spending Plan or a Budget (learn how to make a budget). With a budget you figure out what your income is and what your expenses are. Once you know these two things, you can look for ways to reduce your expenses or increase your income to allocate an amount of money that you can afford to save. This is how the world’s largest corporations do it and this is how most of the world’s successful business people do it. This method takes a little bit of work at the beginning and a check-up every year or two, but it works.
The secret to this method (if you want to call it that) is to identify what you are spending money on so that you can begin to plan your spending. Once you begin to plan your spending, you will gain control over it and you will be able to plan to spend money on your savings. In other words, you will plan to put money into your savings account. Many people don’t like to plan their spending because it involves a little bit of work (once a year). No one is saying that success will come easily, but this little bit of work will pay off big time in many areas of your finances. We dare you to try it - what have you got to lose?
Getting out of debt is tough. It also takes time. Most people need a year or two to escape from debt, but you can do it if you stick with it. Remember, the discipline and techniques you learn by solving your problems will benefit you for the rest of your life. Getting out of debt feels great. Staying out feels even better.
The Smartest Method to Save Money: Have a Spending Plan
The very best method to saving money is to create a Spending Plan or a Budget (learn how to make a budget). With a budget you figure out what your income is and what your expenses are. Once you know these two things, you can look for ways to reduce your expenses or increase your income to allocate an amount of money that you can afford to save. This is how the world’s largest corporations do it and this is how most of the world’s successful business people do it. This method takes a little bit of work at the beginning and a check-up every year or two, but it works.
The secret to this method (if you want to call it that) is to identify what you are spending money on so that you can begin to plan your spending. Once you begin to plan your spending, you will gain control over it and you will be able to plan to spend money on your savings. In other words, you will plan to put money into your savings account. Many people don’t like to plan their spending because it involves a little bit of work (once a year). No one is saying that success will come easily, but this little bit of work will pay off big time in many areas of your finances. We dare you to try it - what have you got to lose?
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