David Bakke is a contributor for Money Crashers Personal Finance and writes about the best strategies to save money shopping for everyday items.
To see how important it is to budget your finances, just take a look at the most complex financial operation in the country: our federal government. It hasn't had a budget in more than three years, and it's currently broke. If you don't have one in place for your personal finances, the time to create one is now. Once it's done, you can evaluate your spending habits and to make adjustments accordingly. If you're a beginner to managing your finances, here are five tips to get you going:
1. Cut Your Grocery Tab
Clipping coupons is a tried-and-true way to lower your monthly grocery bill. Pick up an extra copy of the Sunday paper so you can use the front and back of each page. Find out when your grocer doubles the value of coupons and do your shopping on that day. Organize your coupons by expiration date so none of them go to waste. American households throw out $1,200 worth of food each year, so reduce your purchase costs and stock your kitchen wisely to avoid tossing money in the garbage.
2. Reduce Your Monthly Plans
If you think that your monthly bills for Internet, cell phone, and cable TV are fixed, you haven't investigated the competition. Deals and sign-up bonuses are always available somewhere. Do a simple Internet search to find out which providers are offering the best discounts, and avoid signing a long-term contract if possible, in case you want to switch plans in the future. Look for packages that bundle multiple services, and you can maximize your savings even more.
3. Put off Personal Purchases
If your personal finances are a mess, the last thing you need is a new HDTV or surround sound system you can't pay for. Cross these items off your shopping list - not forever, just until you get your house in order. Do this for anything that's not essential right now. Vacations, theater tickets, and fancy dinners out that you'd have to buy with credit can all wait. If you can't afford to pay it off by the end of the month then you simply can't afford it.
4. Get What You Need for Less
Rethink your trips to convenience stores. Coffee, newspapers, and more can be purchased from other sources for less, or even for free, and all those extras like snacks, sodas, and candies are just unnecessary. If you only buy foods that your body needs, you can not only trim some money off your spending, you'll trim some extras inches off your waistline too.
5. Consider Free Entertainment Options
Instead of expensive trips to the movies that can cost upwards of $50, consider cheaper ways to get your entertainment by renting movies from Redbox. The selection might be a little limited, but at just over $1 per day, it's worth investigating - just make sure you watch and return your movies quickly. If you want to host a dinner party, consider making it a potluck event - you may even have some leftovers when the night is done.
Once your budget is in place, review it regularly. Changes to your financial and professional life can come when they're least expected, and your budget should be updated from time to time to make sure every new detail is accounted for. If your expenses go up in one area (gas, for example) your best bet is to find a way to compensate (offer to carpool with your officemates). Keep a steady eye on your budget, and your finances can continue humming no matter what curveballs life throws at you.
What ways can you think of to trim your budget?Copyright © 2014, The Baltimore Sun