For three years I worked at a call center for a major banking institution and in that time I learned a lot about how people spend their money. We live in tough economic times. Prices of everything seem to keep going up while our wages stagnate, yet it amazes how many people out there have no idea that it is possible to live within your means without totally giving up things you like.
I've been married for ten years and neither my husband or myself found out bank account at zero. We didn't make tons of money and yet we could still enjoy a nice vacation and I could even enjoy my vice of video games. Some would say "well you didn't have kids so of course you had money." While that was true, we didn't go out and blow tons of money on stuff we didn't need.
Everyone's financial situation is different and unexpected expenses happen. Cars break down. Accidents and hospital bills happen. People lose jobs. I get this. These things happened to us too and we were always able to deal with it and very rarely ever asking for help from family. Many times our families wanted to help us and we flat out turned them down. We wanted to be independent and this motivated us to work harder to make a good life for ourselves.
So here's my advice for how to live within your means.
1) Buy a house or rent an apartment you can afford. Your mortgage or rent is what's going to take the biggest chunk out of your income. When we were first married, we had a little one bedroom apartment that cost us $360 a month and it was fine for us. We lucked out in that it had a basement so we had extra storage but it was good for us to start out with given neither of us were making a ton of money at our jobs at the time. Plus a smaller place meant less to spend on utilities. We did eventually get a house. It was a little 2 bedroom house and needed a little bit of work like new windows, but it worked for us. Those of you with larger families, do you kids each need a room of their own? My mom shared a room with 2 sisters growing up. If you claim you need a lot of space, maybe there's some stuff you can get rid of.
2) Second hand goods. Our first place was filled with second hand furniture, either my old bed or his old dresser, we had a couch and loveseat my sister in law gave us. Now that I'm pregnant, I have a nursery full of second hand baby furniture given to us by friends and family. Second hand furniture can go a long way. If it looks a bit beat up, a coat of paint can do wonders. Now with a baby on the way, we cruise yard sales and second hand stores for baby items. I used to hate going to the Goodwill in my old town because the store always smelled bad but this one now is a newer facility so it's not bad and you find a lot of good, cheap used items that look like new.
3) Take care of the things you own. As someone who likes trading in old video games, it amazes me to see what Gamestop takes back. You see game discs without boxes all scratched up and consoles covered in dirt. If you're going to spend a few hundred dollars on a game console, you'd think you'd want to take care of it so it lasts. This applies to a lot of items. In the US people like to buy a car, drive it for 5 years and trade it in. We would rather, take care of the ones we got and run them for 10+ years. Both our cars are paid off and still run great. Learn to check your oil, tires and fluids. Learn how to do basic repairs like change break pads. Take your car through a good automated car wash and get that undercoating to prevent rust every so often. Oh and don't drive like a maniac and you'll save on your insurance.
4) Take care of your health. You know what leads many families to bankruptcy? Healthcare costs and hospital bills. In this day and age you think with all the moans and groans over Obamacare and the high cost of health insurance, you think that would be motivation to take better care of ourselves, yet we still eat junk food and don't exercise then get mad that when we hit forty, we have high cholesterol and blood pressure and have to take tons of expensive meds. What's cheaper? Spending $30 for a gym membership or spending $100 on the medication because you didn't exercise enough. The healthier you are, the less you'll miss work, the lower your health insurance costs will be and you'll feel better. If you can afford a gym membership, then walk in your neighborhood or get an exercise DVD. Yes I am aware that some things are unavoidable. Healthy people get cancer. You're born with type one diabetes, but everyone can eat right and exercise. The sooner you start, the better off you'll be.
5) Walmart isn't always the lowest price. Over the years, we've been told that Walmart is the cheapest place to go and yet I don't always find that to be true. There's two grocery stores in the same area and many times, I have found various goods to be cheaper especially if there's a sale going on. Sure Walmart is easy and convenient because everything's right there, but if you're like me, you don't always like shopping there whether it's their bad corporate policies or the fact that they have 25 registers with only four open. There's a Kroger nearby and many times I saved more there. Why? Well there's this neat little app they have for smart phones. On it, they have digital coupons. In my mom's day she had to clip tons of them and carry them around but in our vast digital age, you can access both store and manufacturer's coupons from your smart phone and upload them to your customer loyalty card so they automatically get deducted at the register. The last two times I did this I saved. I still have good old fashioned paper ones too but they can get lost easily. Also non Walmart grocery stores like Giant Eagle or Kroger have fuel perk programs where you can get enough points to get 10 cents off a gallon. So you got to weigh these options when going to the grocery store.
6) Plan a budget and keep a checkbook. In the years I worked for customer support at the bank, it was amazing that people don't bother to keep a ledger book of their expenses. So many overdraft fees could've been avoided, had people simply had the foresight to write down what they spent. All too often someone would go online to call to get a balance and forget they wrote a bill payment check the day before, then they went out and spent money on dinner only to have the bill payment clear and overdraw them. When you write down your expenses each month and keep track of what you're buying, it makes you realize how much your really spending as well as makes you realize where you could cut corners. I always believed that high schools needed to stop wasting time teaching math you'll never use like Algebra and have a required class in Managing finances.
7) Pay off your debts. You get that bonus at work or get a decent tax return, your first instinct is to go blow it on some new toy. Maybe you should step back and use it to pay off those student loans or your credit card that's gotten a hefty balance from the last new toy you bought. The longer those debts linger, the more interest they'll get. My husband and I had school loans, car payments and a equity loan we used for home improvements and about 2 years ago they were all paid off. Aside from a little on our credit cards, we have no debt and it's an amazing feeling.
8) You may have to forgo some things for a while. I always hear "I can't afford to X" yet they have cable, or a new smartphone, an Ipad or an Xbox Live subscription. When we were first married in our little apartment, we had no cable or internet. We watched DVDs on his original Xbox, listened to the radio and if we needed internet we either went to the library or to a family member's house. A lot of folks I know have ditched cable in favor of Netflix and really the only thing you lose are live sporting events. At one point, we ran into a tight situation and downgraded our cable to basic, which meant getting rid of DVR and HD and honestly, we were fine with that. Basic cable is dirt cheap and most of the shows we liked were still available. It's hard to not have internet in this day and age but there are options for cheaper plans. So if you have to you may have to downgrade that cable or cell phone plan and trust me, you won't miss it as much as you think.
9) Cook at home more. We work hard all day and, for some the idea of coming home and having to cook seems exhausting but think about it, what you spend on groceries in a weekly trip can feed your family for a while, while that same amount spent at a nicer restaurant only lasts an evening, maybe two if you had leftovers. I've made the conscious effort to make more home cooked meals and many don't take that long. I get non perishable things like rice and beans that I can store. I stock up on canned and frozen vegetables. If I make a large meal, I'll freeze some to save for another time. I've made some good, healthy meals and saved a ton on ordering and eating out. More so I really enjoy cooking now and experimenting with things. Plus I almost always have leftover so my husband can take something for his lunch at work.
10) Continue these things even if you do get more money. Say you finally get that great job that pays well now and sure you can go back to having cable or go out to eat a little more often but there's no reason to stop being smart about money. Most wealthy people didn't get there by being stupid. Even when money was good for us, I still found myself looking for a bargain. We still enjoyed going to yard sales and finding hidden treasures. When we did have extra money, we invested it in a retirement fund, put it in savings and of course paying any debts that were owed. As I said, you never know when your car will break down or you'll have to go to the hospital so it's good to be prepared for those things.
So that's my advice to save money and doing all these things helped me out greatly and I never felt like things were that tight. I still went out and had fun by visiting friends and family, going for walks at the park, taking smaller weekend road trip vacations. Sometimes it's not a matter of what you want rather it's what you need.
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