Education

Cutting Expenses and Increasing Income

There are steps you can take to get a handle on your finances – and your financial stress. The very first step is to figure out if your income covers all of your current expenses. An increase in expenses or a drop in income usually means a change in lifestyle. The sooner you look at your household budget, the more options you have and the better off you will be in the long run. Once you have a better understanding of where your money is going, it’s time to look at ways to make the best use of your hard-earned dollar.

Cutting Expenses
If you find that your expenses are more than your income, you can take steps to develop a spending plan and move toward balancing your budget.

Begin by listing your expenses, starting with expenses that provide basic needs for living. Some of these are fixed, such as rent or mortgage payments, car payments, or installment loan payments. Some are variable, such as clothing or consumer goods. These expenses have some flexibility.

It is important to know what you are currently spending to find ways to reduce spending and balance your budget.
After you have your list, the next step is think about what can be reduced or completely cut out. Think about how a repeating weekly or daily expense will add up over an entire year.

How can you save more?
Buy gently used clothing. Instead of spending or more on name brand jeans with holes, your teenager may find “cool” jeans for $6.
Save on energy costs. Turn down the thermostat 5 degrees. Turn off lights or a television when no one is in the room to save money on the electric bill.
Deferring on a repair or doing it yourself. If you don’t have the skills or the tools, perhaps there is a neighbor or friend that can help.
It is essential to stick to your spending plan. With less income, each spending decision is critical. Finding ways to pinch pennies can add up to dollars you can use to make ends meet

Even in good economic times, financial experts recommend a spending plan for effective money management. But good financial planning is an even more essential tool in tough times. Setting priorities for spending is a necessary step in finding a way to balance your budget-especially when you have less money available to spend.

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