Many people wait until they find themselves in financial trouble due to a layoff at work or a salary cut to really take a hard look at their spending habits. But isn’t that closing the barn door after the horse is gone?
This is why it’s important to become PROACTIVE, rather than REACTIVE, when it comes to your finances. In flush times, it’s easy to spend money like water. The kids want video games, hubby has his eye on a set of new golf clubs, and you must have the newest phone. But what happens when one of you loses your job and it suddenly becomes near impossible to make ends meet?
The time to take a good, hard look at your financial situation is before hardship strikes. Examine your budget and see where you can cut back. Do you really need ALL of those cable channels? Maybe you’re not using all of your cell phone plan minutes. Reduce your spending on nonessential items, like morning coffee — you can easily (and more cheaply) make your own at home and bring it with you to work. Cut out discretionary spending. Going out to eat is a huge money-suck. Go grocery shopping and make your meals at home. They’re bound to be healthier, too.
It’s also important to have an emergency fund that can cover at least six months of expenses. While it seems difficult to build up this cash reserve, it will be worth it in the end. Take the money you’ve saved by reducing your spending and put it toward your savings.
Lastly, ditch the plastic. Credit cards are probably the most invasive budget-busters ever. It’s easy to pay with credit, but money put toward paying off those credit cards and the interest that accrues could be better spent elsewhere. You may find that you can do without half of the things you believe you MUST have.
Cutting back on your expenses now will save you heartache in the long run. If life throws you a curveball, you’ll be prepared. Instead of spending on material things, focus on free activities and spend quality time with your family. Go to the park, see a free show, visit a museum — the possibilities are endless.
