Make a list of everything you spend money on each month. This would include savings, housing (rent or mortgage), insurance (homeowners, rental, and automobile), utilities (electric, water, gas and home phone), creditors (major credit card companies as well as department or specialty stores), and groceries. Don’t forget about internet, entertainment (satellite or cable television), property taxes, automobile upkeep (gasoline and maintenance), charitable giving, and family gifts throughout the year.
There are a number of websites available online which provide blank budget forms for people to download. You may want to find one or more of these to use as a guideline. Some also provide expected percentages for each category of spending such as allowing 28% of your total income for housing. The more information you can fill in on these forms, the better able you’ll be to create a budget that works for your family.
Begin by adding together your total income and placing that on one line of the pre-created budget or write it on a sheet of paper. Next add all of the expenses from the various categories requiring payments. Subtract your expenses from the income and look at the result. If you have money left over, that’s great! You can use some of that money to add to savings or pay down credit card debt. The problem comes when there are more expenses than there is money to cover them. This is when you realize there’s a problem and it’s time to get it under control before it’s too late.
What do you do if your family’s income varies each month because someone gets paid by commission rather than a traditional paycheck? You can still create a budget by creating a budget based on your lowest income months. This means you’ll need to keep track of paycheck stubs for a couple of months to determine what that number should be, but the exercise will be worth your time and effort.
When you receive a bonus or have better sales for the month, your income will show it. Rather than simply taking that extra money and spending it all on frivolous wants, put some of it aside for leaner months. You can also use extra income to pay down credit you’ve received in the past.
Cut Up Credit Cards
Some people who spend excessively don’t have a problem with actual cash in their hands. They do, however, have a tendency to spend without thought when it comes to using credit cards. It may not matter to them if they have a large balance and are paying interest for it each month.
Knowing what triggers you to overspend is a great step to getting your spending under control. Learn self-control when it comes to using your credit cards, or cash on hand, and you can begin to see light at the end of the financial tunnel.
If you find you simply cannot change your excessive spending habits, you may have to use drastic means to make it happen. You may have to cut up your credit cards and ask the accounts to be closed. Of course, you’ll still have to pay the balance you accrued, but you won’t be able to add anything to that balance!
Learn to Control Spending
It’s really hard to listen to friends, family, or co-workers talk about the new things they have. Maybe they bought a new car, a big screen television, or something else you’ve wanted. Even though you’d like to own the same things, there’s nothing that says you have to. You don’t have to fall into the mindset that you must “keep up with the Joneses.”
Maybe you’re used to going out to lunch with friends every day. Over the course of the month, that can add up to quite a bit of unnecessary spending. Look at the following scenario:
You spend $7.00 a day on lunch with your friends. That means you’ll spend an extra $35 a week, $140 a month, and $1,680 a year! You would be spending even more than that if you’re accustomed to eating at higher end restaurants where the prices are more. Now think, what else could you use that money for?
Instead of going out to eat every day of the week, take your lunch with you. Not only will you be saving money, you will also have more control over the foods and the amounts you eat. Your health will likely improve and you may find you start losing weight simply because you’re not eating such fat-laden meals.
Does this mean you can’t go out and eat with your friends on occasion? Of course not! Choosing to go out to eat once or twice a month still allows you to feel like you’re not being deprived and yet reigns in your spending considerably.
Look for other ways you can reduce spending by going through your budget. Obviously some things on your budget are fixed expenses, but even with those you may be able to find ways to save.
* Satellite or cable television – Can you reduce the programming for satellite or cable television? Instead of having the “everything” package, can you do without all the movie channels you never watch?
* Cell phones – Does everyone in your family really need their own cell phone? In most cases teens and children simply don’t need cell phones; they just want them because their friends have them. Do you really need access to the internet on your cell phone or some of the other services which add to your monthly bill?
* Electricity – Do you often go through your home and find lights on in rooms that are unoccupied? If you do, your family is wasting electricity. What else are they leaving on? Does the television run when no one is watching it? Adjust your heating or cooling to help reduce costs. It may be a little cooler in the wintertime or warmer in the summer than you’re used to, but it can make a dramatic difference in the amount you spend monthly for your electric bill.
* Transportation – Use public transportation where possible. It may be this isn’t an option, but you may still be able to save. Find other people to carpool with you and share the expenses. Be sure to keep your tires properly inflated and car tuned up. This will reduce wear and tear on your car and help it to run better.
* Food – Stop wasting food. Eat leftovers rather than throw them away. Plan your meals prior to going to the grocery store. This will help you make a list of items you’ll need so you can avoid impulse purchases. Buy only the items on your grocery list. Use coupons to help you save more money. Finally, by having a meal plan, you can be sure you purchase everything you need for each recipe so you can avoid frequent shopping trips to pick up items you might have forgotten.
Spend Only What Is Necessary
Don’t allow yourself to add anything else to your credit cards or debt load. This means you’ll need to use self-control or restraint when you’re tempted to spend. Don’t give in to your desire for immediate satisfaction; learn to use and appreciate delayed gratification.
Rather than going ahead and making a purchase when you see something you want, start a list of items you’d like to purchase. You can begin saving money to purchase that item with cash instead of using credit. Waiting until you’ve saved the money will accomplish a couple of things: First, it will give you a chance to have a cooling off period. You may decide after a week or so that you really don’t need that item any longer. Second, you will be able to do some research to see if you can find the same item for a cheaper price. It may also be, by waiting, that item will go on sale which will allow you to get it at a reduced price.
There are millions of people across the country who struggle with spending more than the income they make. It’s not something that is specific or limited to one country or one ethnic group. People from all walks of life may struggle with this problem.
Fortunately, you don’t have to be a victim of consumerism. You can learn these strategies to stop excessive spending. It may not be an easy thing to do, but the results will be worth it. You will be able to break the cycle of spending more than you make. It may also be possible for you to bring down debt and begin saving for the future.