5 smart spending strategies
WHEN A tough economy is making it hard to make ends meet, it may be time to rework your household budget.
Reorganizing your budget can help you get a better handle on your current cost of living and also provide some valuable information about your savings potential. Here are five smart spending strategies when enduring a tough economy: Seek out membership deals. Find a warehouse club so you can buy in bulk. Most offer oneday trial memberships so you can scope out the inventory. Travelers can sign up for members-only travel deal sites (most are free) to take advantage of discounted packages.
Remember that memberships are only valuable when the cost is justified by the amount of discounts you receive. If you’re not a frequent shopper, you probably won’t maximize your membership benefits. Overestimate your expenses. When you’re putting together a monthly budget, you’ll be better off overestimating by 10% to 20% how much your groceries, electric, and other variable expenses will be. This approach can actually reduce some stress about money because you won’t feel chained to a low number. Buy used. If you’re in the market for a new car, computer, or furniture within the next couple of months, seek out used merchandise to save on costs. If you can hold off on buying for about six months, find a way to save up money for a new item instead. Stick with your budget. Get into the habit of reviewing your budget regularly so you aren’t making frivolous purchases. You may not be able to cut or reduce these expenses significantly, but you will be able to set some limits to make your budget work. Create a wants vs. needs list. You might have had plans to take a long vacation, host a big party, or renovate your home before the economy took a nosedive, but can’t justify making those purchases as money gets tight.
Draft a "wants vs. needs" list so you can prioritize your larger expenses and set savings goals to cover them. But avoid the temptation to satisfy these "needs" by using a credit card or taking out a loan. One of the worst money moves you can make during a tough economy is to add to your debt load.
Sabah Karimi Excerpted from U.S. News & World Report’s Money page:
money.usnews.com