Where is Your Money Going?
In order to determine where you can cut back on your household expenses, you need to have a good sense of where it is you are spending your money each month. Even if you are very good about budgeting and have a general idea of what monthly bills you pay and what the typical amounts are, tracking your expenses for at least a couple of weeks is a good exercise.
First, make a list of the recurring monthly expenses (such as housing payment, auto payment and insurance, utilities and credit card or loan payments. If possible, look back to see how much you paid on each account over the last 3 or 4 months and figure out the average monthly cost. Do you know how much you spend (monthly) on groceries, entertainment and miscellaneous? If so, I am impressed. Most people, however, don't track these types of expenses as closely. For the next couple of weeks, track every dime you spend by ensuring you get receipts for everything, and keeping the receipts together. You might find that you are spending an average of $30 per week on Starbucks or $75 a month at your office's snack vending machine.
Downgrade or Downsize
Once you have a really good sense of where your money is going, you can begin to identify money-saving opportunities. Begin to examine what it is that you are getting for your money on each of your monthly accounts. For example, perhaps you are paying for both cellular phone service and a land line. If you are like most people, you might use your cell phone almost exclusively. If this is the case, you can save money (and harassing telemarketer phone calls during dinner) by cutting the landline off.
Take a look at your cable package and determine if you really need all the premium channels included. If you call your local cable company and tell them you are having trouble affording cable anymore (and particularly if you tell them you'd like to shut off service) you will be amazed at what they can offer you in terms of promotions and package downgrades to make it more affordable.
Finally, call your credit card companies and ask them to reduce your interest rate. Depending on your payment history and other factors, they might be able to work with you and save you some more money there.
Cut or Replace Small Luxuries
The trick to replacing small luxuries is to do so without feeling like you are compromising your quality of life. Perhaps you forego the daily Starbucks drive-through visit, but if you invest in high-quality coffee beans to brew at home and a nice travel mug- you're good to go! Instead of giving up visits to your local specialty grocer, make sure you're stocked with coupons or that you only buy items that are on sale. In terms of entertainment, giving up going to movies or going bowling may not sound like fun, but having a family game night or talent show could end up being just as fun and can turn into a greater bonding experience.
The key to cutting a household budget is to be creative and to have a great attitude.
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