Most household budgets get into trouble when savings rates are low. Determining how to spend your income is a very personal decision, but bringing your spending into balance with your values and goals can make it easier to spend authentically and save for an emergency.
Are Your Financially Out Of Balance?
What’s important to you? For people of faith, the first check to be written may be their tithing check. If fitness is important, covering your gym membership and stocking the refrigerator with healthy food might be of critical importance. Is education high on your priority list? Getting your children into a private school may be a goal.
Where many people get into trouble is when their spending doesn’t match their goals. There’s nothing wrong with spending extra on premium clothing if those garments bring you joy every time you wear them. But if the thrill of purchase is more important than the joy of getting full use from what you buy, you’re probably headed into a problem area. Similarly, for fans of fitness and health, daily trips for candy and soda aren’t necessarily a large expense, but over time they add up. They also get in the way of your personal health goals.
How about technology? If your goal for your family is to spend more time together outdoors, or if you’re working hard to help your children build a reading habit, check out your cable expense. Basic cable for internet only can run less than $100 a month and give you plenty of internet access. If your television has become another member of the family because you all gather around it every evening, maybe it’s time to reduce your exposure to this screen in particular.
Ways To Tell You’re In Trouble
If your spending is in balance with your life and you’re still facing mounting debt, it’s time to act. Are you considering a consolidation loan because it will
1) lower the interest on your debt?
2) allow you to wipe out credit card debt?
3) reduce debt to one payment?
Be very careful before getting a consolidation loan. The interest on your credit cards may be nasty, but unless you’re ready to cut those cards up (or at least start using them) after paying them off, you’re still at risk of building up more debt.
When You Need Quick Cash
Getting a car title loan is a quick and convenient way to get enough cash to cover an emergency expense. Unfortunately,these loans put you at risk of losing your car. They also charge punishing interest rates and may have hidden fees that will severely impact your ability to pay off the loan.
Start An Emergency Fund
Leading financial authority opinions suggest we have between three and six months savings in an emergency fund. This may seem like an impossible goal, but don’t let it stop you from starting your fund.
Make a goal of $10 a week. If you eat lunch out of the office, pack peanut butter and jelly on Tuesday and Thursday. At the end of that week, stash your $10 in a savings account. Next week, flip your days and pack a sandwich for Monday, Wednesday and Friday. Now you have $25 in your savings account. Continue the pattern, or start packing your lunch every day, and soon you’ll have cash that you can rely on for emergency car repairs or unexpectedly high utility bills.
There are tons of ways to cut expenses by a little bit, and each of these is an opportunity to save. As you build up savings, you can make bulk purchases that make it easier to save more in the future.