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Budgeting, economy and the economic crisis.
I have been married and running a household for nearly 13 years. During this time I’ve learned that if you don’t have a budget and you enjoy “things” or going shopping then you won’t have money to pay for the necessities in life. Some people may be saying to themselves “Well, duh!” but others may very well be in that boat or maybe you are somewhere inbetween. Maybe you budget but there is still no money to pay for those things.
I can’t promise more money coming into your possession, but I can outline some things that I’ve learnt that can make the money you receive cover more of your expenses.
A budget according to dictionary.com is: an estimate, often itemized, of expected income and expense for a given period in the future.
Economy actually means the same thing but is applied to a working system already and concentrates on the frugality of it, making it cost the least amount possible. I was floored to read that an obsolete use of the term was to run a household! This should be the most common use of all…perhaps we can turn that around!
In saying all that lets see what we need to do in this time of global economic crisis and in some parts of the world, recession. We need to look at every cent (or whatever your smallest denomination of money is) and account for it.
1 Get yourself a piece of paper and a pen.
2 Write down how much money comes into your household from work, government benefits, interest from the bank, any other earnings. This is your total income.
3 Write down ALL expenses for a given period (a year is a good one). Mortgage/rent, electricity/gas, water, insurance, cost of licensing, running and maintaining all vehicles, medical bills, travel expenses (bus, train), parking expenses, food shopping, other shopping, entertainment, gifts (birthday/christmas), hobbies, school books, school fees, takeaway meals…everything in your life that you have to pay for. This may take a long time, or if you’re really organised not long at all. Please don’t estimate everything because if you are finding it hard to make ends meet then there is something you may be underestimating your spending in one or several areas. Keep receipts, ask for receipts if the person doesn’t automatically give one. This total number you come up with is your expenditure.
4 Now that you have a number for both, it’s reconciliation time. Time to see how the numbers compare. The first number, your income should be bigger than your second. If it isn’t, that is your goal.
There are two was to do this and I’m only covering one. The ways are – make more money and reduce spending. We are looking at the reduce spending side, which feels like you make more money if you do it right.
5 You need to look at your expenditure list again. Closely because something HAS to give. You have to make choices to take control of your life. Do you do anything that is needless spending?
For example -drive your car to work and pay for parking
- get takeaway breakfast, lunches or dinners (or all three) because you are pushed for time or are not organised
- need to keep up the Joneses (who may be in a worse situation with you so don’t covet their life)
- buy the kids everything that they ask for, no matter the cost
- drinking alcohol or smoking
I could go on, but you get the idea. What do you do to combat these things?
- take public transport if possible, this cuts costs and reduces wear and tear on your vehicle.
- organise your pantry/freezer and put together a meal plan, and follow it
- be satisfied with the possessions you own and look after them, mend them if broken instead of throwing them away
- don’t buy the kids everything they want. They won’t die, really. You have to be tough and teach them, surely they’ve heard of the economic crisis, if not, tell them about it.
- drinking and alcohol are huge drains of money if you let them be. There is no nutritional benefit (although some can argue the once a day wine etc). Let me put it this way, there is not documentation of someone being worse of or dying because they didn’t smoke or drink…think about it.
While saying all this, there is also something called false economy. Something that people practice everyday, unfortunately. They think they’re getting a great deal by buying the whole pumpkins that are on special, so they buy it instead of the 1/4 they usually buy. DON’T. Just buy what you need. You can cut your spending. You can also cut your rubbish/trash. Most people in Australia throw away 1/3 of their groceries! This is madness. Say you have 3 meals in your week with potatoes and you need 2 potatoes at a time – just buy 6 potatoes, don’t buy the whole 4kg bag, it’s more than likely that you aren’t going to use it all before they die.
Now you can take this a step further after a while or if you’re already at this stage. Look at the nutritional value of the food you already eat. Do you drink a lot of coffee? Perhaps you can cut down and add in some cups of tea, tea is WAY cheaper. Or instead drink some water, they’re always telling us to do that! Do you buy those little packets of museli bars wrapped in three layers of plastic? You know a bag full of bags of bars all nicely organised in a plastic tray? How much of the cost contributes to the packaging? Try making your own snacks or buy fresh fruit and do the old fashioned lunch box for work. You may feel a little dorky but look around, a lot of others do it too.
Some thing has got to give in this current situation, don’t let it be you.