This guest post comes to you from The Digerati Life, a site that covers financial topics that range from which online brokers to choose, to how you can teach your kids about money. The blog is up for a Plutus Award for best career blog... I encourage you to vote for The Digerati Life in the category of Best Personal Finance Blog for Careers. The following piece focuses on why many people are broke and what they can do about it.
Yeah yeah, you've heard this before, but it's always worth reviewing the basics, in my opinion. And what exactly is the secret to becoming financially secure? In my mind, it's living within your means. It's the key to good personal finance management -- seems so obvious yet if you look around you, it's basic advice that many people don't really bother to follow.
But the fact is, living within your means is the first step towards successful budgeting and getting your financial house in order. It's simple enough -- you can do this by controlling your spending a couple of ways: either by sheer will power, or maybe by being more organized and strategic about how you spend your money.
Many people have fallen into financial trouble to the point of having to file for bankruptcy when they become credit card addicts, or when they decide to take on too many low-interest rate loans or commit to a mortgage when they just don't have the kind of income to support it all. Balance transfer credit cards and 0% interest credit cards are tempting to carry, but those 0% offers don't last forever. Eventually, the card rates shoot up and you'll be paying a lot more unless you're able to wipe out your balance before those rates adjust.
But here's some good news: since the implosion of the real estate market, we've learned a whole lot, as a nation. We now understand the importance of living within our means and of working with a budget. Some people have now changed their habits and have begun making changes in the way they manage their money. It may have taken a financial crisis for folks to sit up and take notice of their finances, but some gradual changes are afoot in many households. Here are a few steps we've taken to join the frugality bandwagon and add more to our high interest savings accounts:
Living Within Your Means: Some Steps To Frugality
Cut your telephone bill.
Here's one area where I've actually saved some money. Those services that offer a variety of packages such as your cable bill or phone bill may actually be one area where you can save a good amount. By finding the right custom "package" for your family based on your service usage, you can get the best value for your money. So analyze your phone bill and see if you can make do without the extras. Often, you'll find that going with a basic telephone service may be sufficient; also your telephone bill can be reduced by a lot if you know your calling patterns well and decide to stick with billing packages that are a fit to your patterns.
- Simple changes to how you use energy at home may help with bringing down your energy costs. For instance, switching off power when you don't need it, keeping your thermostat low and even switching to CFL bulbs are some popular ways to cut down on your utility costs. Some people go beyond this by really adapting the green mindset: they invest in things like a solar roof for their homes and Energy Star appliances to help conserve energy at home.
[Editor's Note: For more tips see Save Money on Utilities]
- These days, you can find a lot of free and cheap alternatives for your entertainment needs. This is also one expense category that you can easily cut down on. To cut costs, people have replaced watching movies at the theater with more family time, and long distance travel with visits to the local park or zoo. When you think about it, these alternatives can prove to be just as fun as the more exotic activities that may come to mind.
[Editor's Note: For more tips see Save Money on Movies , Music, Television, and Books]
- These days, people are chasing after too much convenience and often find themselves hanging out at fast food joints and restaurants instead of cooking at home for the family. Over the long-term, this can become both a costly and unhealthy habit. In our household, we enjoy the occasional take out night, but we do our best to control our food tab!
[Editor's Note: For more tips see Save Money at Restaurants.]
- Take a look at how much you're spending on transportation. Are you happy with it? If your gas usage is bugging you, then try for some practical solutions and see if they're worth pursuing. Will carpooling work? How about using your town's public transportation system? Sure, it may mean having to make adjustments in your schedule or routine, but if it's worth the savings for you, then it's something you should try to consider.
Reduce your electricity bills.
Take a look at your entertainment costs.
Cut your dining and restaurant bills.
Control your transportation costs.
So if you really want to find that extra $100 you've been meaning to invest with an online discount broker or mutual fund company for a while now, then by digging a little deeper, you may be surprised by some of the extra trimmings you can do without. It just takes a little flexibility and a tad bit of discipline to keep your expenses in check.
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