Minimizing Your Household Expenses

Managing your household can be very costly and resource-consuming. You have a lot to deal with in terms of fixed and miscellaneous expenses. Fixed expenses consist of utility bills, credit card payments, and taxes. These financial obligations are constant for every month or few months, depending on your payment arrangements. On the other hand, miscellaneous expenses vary greatly each month and depends on your lifestyle.

These are the main reasons for your cash outflow. Proper management for your fixed and miscellaneous expenses is your main strategy to get by with your budget and set some money aside for those rainy days. Here are some areas you can start saving on your expenses.

Group Your Services

Find a service provider that offers bundles or packages for the services you use. These could be your phone, internet, and cable service. A lot of internet service providers sell packages that include these three for a cheap price. Instead of paying them separately, group them so you can save more.

Use the Basics

Check your subscriptions if you’re paying for something unnecessary. For your phone plan, you don’t really need a caller ID or call waiting unless you’re on the phone most of the time or rely on it for your daily tasks. Browse other plans for your cable TV as well; you might be paying more for premium channels you didn’t even know existed. Also check your internet subscription if you use it to the maximum. If you just use it to check emails or do simple browsing then you don’t really need the high speed tier available.

Downgrade your subscriptions to the basic, ensuring that you only pay for what you’re using. Just because there’s a more expensive option doesn’t mean you have to avail of that service. You’ll save more money in the long run by this simple change.

Think Thrifty

Even if it’s a necessary expense like food, there’s still room for you to save. Start looking and collecting coupons and familiarize yourself with sales that frequently happen in your area. Groceries and food shops often have sales at specific times of the month to get rid of their unwanted stocks. Choose your shopping dates wisely and take advantage of these promotions. You can save more than 50% by using coupons and by buying from the sales aisle.

Another area where thrift buying comes in handy is your fashion. Clothes are a constant expense and if you’re not careful, you could be wasting money. Avoid buying label or designer clothing, browse in thrift stores or second-hand shops instead. A lot of fashionable items can be found there while their prices are dirt cheap compared to designer brands. If you’re worried about sanitary issues, you can always have them dry cleaned to remove any unwanted odor.

Review Your Insurance

Insurance is a necessity, but it also takes a huge portion of your budget. Shop around and compare insurance rates for your car or health premiums. Insurance companies always have discounts available so you can ask them what they can offer you. If you want to stick with your current insurance company, you can talk to them about downgrading your plan. This can be applied for your car, health or house insurance policies.

Another option to reduce your insurance premiums is to combine them under a single company. Even if it’s a health insurance company, they also offer some sort of protection regarding your car or house. You might even include your children under your insurance policy to reduce the total price.

Conserve Energy

Utility bills are considered fixed expenses wherever you live. You need electricity just for basic functions in your house. This doesn’t mean that it has to be expensive and you can’t do anything about them. If living like a hermit doesn’t work for you (it’s impossible nowadays), then you can reduce your electricity bill through:

  • Change your light bulbs to energy efficient ones. LED light bulbs can cost more than other types, but they last longer and use lesser electricity. They will pay for themselves through your long-term savings.
  • Use your thermostat sparingly and efficiently. When no one’s home you can turn it off or if you’re not using a room, you can set your thermostat for a single room only. If you’re alone in the house, you can even turn off your thermostat and just wear a thick sweater or use electric fans. There’s no sense in wasting all that energy just to warm up the entire apartment when you just use it alone.
  • Buy a power strip for your appliances. Television sets and computers consume electricity even if they’re on standby. A power strip cuts off all electricity to these appliances with a simple switch. You don’t need to unplug every appliance when you don’t use them, just turn the power strip off.

Reduce Entertainment Expenses

Avoid spending a lot just to have fun, but we’re not telling you to stay away from all forms of entertainment. There are inexpensive options available which still allow you to have fun. Instead of going to the movies every weekend, you can rent movies and watch them in the comfort of your own home. Local libraries have an extensive and updated DVD selection. Membership is free so you should sign up and start browsing there.

As a substitute for eating out, cook meals in your own home or go on picnics. You’ll reduce your dining expenses a lot and you can still enjoy your friends’ company. You can even organize potluck dinners with your friends so you won’t have to go to bars or restaurants.

Prepare Your Own Meals

Regarding your meals, buy your own ingredients and cook your own dishes. Depending on your skill, it won’t be look and taste like a restaurant’s dish, but you can save more. In the restaurant, you’re paying someone else to prepare your food, the building’s rent, and you have to add tips on top of that.

Cook dishes in multiple servings and separate them into single-serve containers. You can use multiple ingredients at this time (justifying your bulk purchase), and you’ll have easy to heat meals after or the next day’s lunch already prepared. Some recipes even let you use leftovers so you can recycle food easily and avoid throwing them away. Each time you throw food that went bad, it’s just the same as throwing away money.

Pay on Time

If you have the habit of paying your bills after the due date, you’re spending more on your late fees. Make it a point to pay your bills as soon as your pay check arrives or you can even set up online payment to make things easier. Once you pay your bills on time, you won’t have to worry about penalties and other unnecessary expenses.

Some of these tips for minimizing your household expenses may require you to change your lifestyle. However if you consider it in the long run, you’ll save more and you will be able to use this money for something else.

A Young Adult’s Guide to Living within Your Means

While you were still in high school or middle school, you didn’t have any subjects about personal finances, tax, or retirement. Once you get your first job, you’re pretty much clueless about managing your money. The early twenties is a very good time for you to start saving for your goals and even for retirement. However, many young professionals don’t see the need for this or simply don’t know where to start. Don’t be afraid to get started on learning personal finance. It’s not that difficult and you don’t have to do lots of reading. Math doesn’t have to be your strong point as well. Here are some things to get you started on managing your money.

Control Yourself

Your parents may or may not have taught you about self-control. If they skipped over this part, keep in mind that you don’t need to buy what you want as soon as possible just because you can. If you see a new gadget coming out next month, happiness doesn’t mean buying it off the shelves immediately. Sure, you can use a credit card to delay payments, but the interest rate will make it more expensive. In addition, once you start charging items to your credit card, it doesn’t stop with just an item or two.

Don’t rely on credit cards too much for your purchases, important or not. Keep the number of credit cards you own to a bare minimum. You don’t need 4 or 5 credit cards just because you could apply for it or it was given to you. If you do use a credit card, make it a point to pay the bill when it comes around. Delaying it will incur interest rates and other fees which equate to paying more than the store price.

Think about Your Financial Future

Learn to manage your own money first; or you will end up requiring other people to do it for you. In this case, there’s no assurance that they’ll manage it the way you want it or that they’ll get achieve good results. In addition, financial planners or managers cost a lot of money. It’s a bit ironic (and expensive) to pay other people to manage your own finances.

What you can do is to start reading a few books regarding personal finance. There are a lot of free resources you can find on the internet or in self-help books. Don’t worry if you’re not familiar with anything about finance, these resources range from the total amateur to professional level.

Once you do soak up some financial knowledge, make sure to apply them in your personal life. It may be difficult, but limit your significant other’s spending habits or set boundaries for your night outs. These are necessary steps to make sure money works for you.

Find Your Money Trail

After you’ve read through personal finance books, you’ll develop an understanding for keeping track of your expenses. Monitor your expenses to make sure you’re not spending way over what you earn. This is where budgeting skills come in handy. By watching what you spend on every month, you’ll know which small expenses add up and need to be curbed. That morning coffee on your way to work might seem like a minor expense, but when you view at it on a monthly perspective, it really accounts for much.

Make changes to your budget if you deem it fit. If it’s not possible to totally remove an unnecessary expense, you can substitute it for a cheaper alternative. Instead of buying your morning coffee at a coffee shop on your way to work, you can choose to brew it yourself and just bring it in a flask. You should know by now how much these savings add up in the long run.

Create an Emergency Fund

Part of financial experts’ advice always includes setting aside money for you. They don’t mean setting aside money for shopping or for your partying. Put money aside for an emergency fund. With the volatile economy right now, you never know when you’ll suddenly find yourself jobless. There might also be a medical emergency for you or your loved ones. Keeping cash for these scenarios is important since you never know when they will happen.

In addition to creating an emergency fund, constantly setting aside a portion of your paycheck can easily develop this habit. After you’ve set aside funds that can last you from 6-8 months, you can move to other saving accounts. You will be able to save for things like a new house, a car, or your retirement with ease once you develop the habit.

Set Aside for Retirement Now

While you were still in the kindergarten era, your parents were already preparing and making plans for your college days. In a similar way, it’s also a smart idea to prepare in advance for your retirement. What you’re actually after is the compound interest in your savings. So even if you start with a lesser amount, it has more room to grow and you end up with a huge sum for your retirement. This will allow you to retire with ease and without worries about what you’ll do after.

A lot of companies offer to match your contributions or offer retirement plans of their own. While you’re still in the company and will probably stay there for a long time, take advantage of this opportunity. It’s basically free money given by your employer.

Study Taxes

Taxes are very difficult to understand, it’s even hard just to find out where to begin. However, taxes are always there whether you like it or not. Take time to read up about taxes that are applicable to your situation (single, employed, etc) and what other tax options you can take advantage of. Browse free resources online or read up on books that cater to this topic. If you want a quick option, you can just visit online tax calculators that show you how much you are required to pay depending on your situation.

This is a very good method to prepare yourself in the future when you prepare your own annual tax return. This process can get messy and convoluted fast. At first, you might have to rely on a professional to help manage your tax returns, but once you get the hang of it, you can do it on your own.

Take Care of Your Health

It’s easily overlooked when you’re still in the prime of your youth, but your health is crucial in terms of money as well. If you’re sick, you won’t be able to render any kind of work and you might even have to take some time off to recover. Lastly, you’ll have to tap into your emergency funds for this situation so it’s definitely something you would want to avoid while you’re still setting up your finances.

There are a lot of opportunities to save money as a young professional. Your income is increasing, and your job security is high. If you manage your money properly, you’ll be financially stable when you reach middle age and you can even retire without any worries or fears.