Quick Ways To Reduce Expenditures For Those Who Do Not Budget
There is an old saying that applies today as much as it did a century ago. “If you do not spend it, you do not have to make it.” The essence of that phrase is that controlling expenses is the key to financial management.
When it comes to personal financial management, the importance of having a budget and following it cannot be underestimated. This is not a new concept. But, many people hate budgeting because its tedious or it reminds them of all the bills they can’t pay or the things that they can’t buy. For those who cannot bear the tedium, there is hope, and by investing a few hours and working through the steps outlined below, you can create a tool to help you stay close to on budget as possible.
There is no substitute for creating an actual real budget and sticking to it. The advent of the computer and programs like Quicken and Quick Books make making a budget and tracking it fairly easy. Also, banks and credit card companies (e.g. J.P Morgan Chase and Wells Fargo) allow their customers to download account activity into Quicken which reduces the manual data entry burden.
However, assuming that process is too time consuming or to tedious, you should concentrate on your expenses, identifying and eliminating unnecessary expenses, adopting available means to smooth out variable expenses such as electricity and home heating, and reducing debt.
Necessary and Unnecessary Expenses
First and most important is to distinguish between necessary and non-necessary or discretionary expenses. Necessary items are things you cannot do without like food and shelter. Non-necessary items are things like movies, restaurants, and pleasure trips. If you need to reduce expenses fast, identify the largest expenditures of non-necessary items and resolve to reduce or quit those activities. Here are a few common non-necessary items that can be reduced with minimal work:
Some of the largest non-necessary expenditures include unnecessary trips in the car. Planning car trips and errands to reduce the number of trips and miles traveled reduces the amount of gas consumed. It helps the environment and at $3.25 a gallon or more will save you money.
Restaurants eating out for lunch or dinner is a significantly more expensive than preparing the food at home.
Impulse Buys Identify scenarios where you are likely to buy unnecessary things on impulse and avoid those circumstances. Also, if you find that you have made an unnecessary impulse purchase, return it to the store for a refund.
Smoothing Out Expenses
Second, look for ways to reduce payments on necessary items such as electricity and home heating. Some heating and electric companies (such as Center Point Energy) permit their customers to average their bills over year, which can eliminate unexpectedly high heating costs in the winter.
Reducing Credit Card Debt
Third, mounting credit card debt can pose a significant and growing challenge to reducing expenses. If possible always have a habit of paying the full balance due at the end of each month. If repayment is not possible at the end of the month, stop or reduce using the card and make a plan to repay the outstanding balance as soon as possible to reduce interest costs. While there are debt counseling services on the Internet, you careful in your selection and should first check for free local counseling in your community.
While there is no substitute for having a budget, there are things that can be done to target excessive spending and reduce it. This article has laid out a few of the many ways that expenses can be reduced and brought under control. Remember that controlling expenses is a major key to successful financial management.