Clamp Down on Spending
June 09, 2010
Clamp Down on Spending
by John Barrios, CFP
If you're trying to increase savings, remember
that savings are directly tied to spending - the less you spend,
the more you have to save. Some tips to help you clamp down on
your spending include:
- Analyze your spending for a month. Are
you surprised by how much you spend on dining out, groceries,
entertainment, or clothing? Give serious thought to your purchasing
patterns, looking for ways to reduce spending. Clean out your
closet and really assess whether you need new clothes. Cut back
on how often you dine out or at least go to less-expensive restaurants.
Rent a movie
- instead of going to the theater. Make a list before
grocery shopping and don't deviate from it. Look for coupons
and sales before shopping. You may scoff at these ideas for saving
money, thinking you can't possibly add much to your savings.
After all, you're just spending a few dollars here and there.
But over a long time period, even modest amounts can grow to
significant sums.
- Go over major expenditures also. When
was the last time you comparison shopped your auto or homeowners
insurance? Have you checked mortgage rates lately to see if you
should refinance? Have you reviewed strategies to reduce your
income taxes? Take a look at all major expenditures, looking
for ways to save money.
- Make a spending plan and put it in writing.
Budget for all major expenditures and resolve not to purchase
items that aren't in your budget.
- Throw out your credit cards (or at least
hide them for a while). Most people find it more difficult to
spend cash than to charge a purchase. So, for the next couple
of months, make sure to only purchase items with cash.
- Don't purchase items over a fairly low
dollar amount on your first shopping trip. How often have you
purchased something on impulse, only to realize when you got
home that you really didn't need it? To control those impulses,
compare price and value on your first shopping trip. Then go
home, think about whether you really need the item, and purchase
it on another trip. Often, you will find that you realize you
don't even need to make the purchase.
- Think carefully before making major purchases.
Often, upkeep and maintenance can add significantly to your costs.
Consider a less-expensive car or a used car. Keep your car for
four or five years instead of getting a new one every two or
three years.
- Figure out the maximum amount you can
afford for a house and then buy one substantially less expensive
than that. Not only will you save on your mortgage payment, other
costs associated with owning a home will be lower. Living well
within your means is one of the best ways to ensure you have
money left over for saving.
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