Tuesday, October 28, 2008

Saving Money - Setting Limits (Part 1)

In a long ago business math course I took in high school, I learned the concept and value (and also the how-to) of creating a household budget.

I suck at making and sticking to budgets...or at least the traditional sort of budget. I've learned, though, to work around my budget-following deficiency. Here are some tips that might help you to do the same.

Use Cash

Using cash to pay for stuff helps to save money in a number of ways.

First, it forces you to (at least roughly) itemize what you're putting into your shopping cart, to ensure that you have enough to pay for it when you're done. Like dieting, simply becoming more aware of what you're consuming (in terms of hard numbers) will help you to curb that consumption. It also will help you stick to the list you've hopefully made before getting to the store.

There is a second way for it to help. If you've created a budget, you know that you should break purchases up into categories like food, gas, entertainment, healthcare, etc. (If you've never created a budget before, go here, read up, and give it a try). A trick that I've found useful is to actually divide up my cash into those categories, too, each with their own clearly labeled envelope. If you're going shopping for one category (food, for instance), take ONLY the food envelope with you; leave the envelopes for the other categories at home in a safe place. This will keep you from "borrowing" from one category to splurge in another.

Using cash will often help you at the gas pump, as well. Many stations charge extra for credit or debit card purchases.

Know the Difference Between Need and Desire

We're all guilty of it: choosing a more expensive option than necessary when buying something we need. There are probably dozens of reasons we do it, including convenience, emotional attachment, and status. You *can* break away, though.

Take, for instance, meat. My household eats meat, and in the past we have frequently purchased whatever looked good at the moment, or suited a particular recipe we wanted to make. Now, however, we're changing our ways.

I studied the local grocery flyers for a few weeks, and I realized that there are many meats available for under $2 a pound. So I decided not to spend more than that on meats unless it were a special occasion. It's worked out wonderfully. We dine on many cuts of chicken, london broil, lean ground meats, pork loin and various roasts. It's a choice that we haven't regretted at all, and that has saved us a ton of money. Study the grocery flyers in your area and pick a price point that makes sense for you, and get started saving!

There are lots of other examples of creating a limit that fulfills a need without succumbing to a bloated budget:

-I don't buy shampoo that costs more than $1 per 15 oz.
-I buy coffee out only rarely. It's cheaper (and frankly, often better) to brew it myself and bring it along.
-I put on a heavy fleece pullover when I'm cold, instead of turning the heat up. In winter, I keep the thermostat at about 60.
-I buy almost all of my media used, or I trade for it. eBay, half.com, yard sales, thrift stores and sites like , and bookmooch.com are invaluable.
-I never, ever buy shoes that aren't on sale or used. Clothing, either.
-I buy local, in-season produce, often at the farmer's market, rather than expensive, imported, out-of-season stuff from the grocery store. Even there, you'll find that local in-season produce is usually cheaper.

Try some of these strategies out or make (and hopefully share) your own!