Imagine a world where you didn’t have to pay for anything ever! Wouldn’t that be the easiest solution to making Household Finances Easier?!?!?! Here are 5 tips that you can implement today to start to save money and simplify your finances.
Best Way to Save Money: Spend Less Than You Earn
I once said to my husband, “Our credit card bill is so high this month, we need to earn more.” His response was, “We should probably just spend less!” This may seem like the easiest solution ever and that’s because it is. This is my family’s Financial Mantra. For most households, strict budgets do not work. If you have tried to budget, given up, and find yourself in debt… follow our Financial Mantra to Spend Less Than You Earn!! Maybe the answer is the need to earn more, but to spend less is more immediate as you strive to earn more.
Home Budget: Know Your Monthly Fixed Expenses
These are the expenses that you will pay month-in and month-out and that typically do not change. For example these are bills like a mortgage/rent, telephone, insurance premiums, etc. Don’t forget to include your monthly hobbies or the kids’ dance, music lessons, or other sports.
Budget Plan: Know Your Average Variable Expenses
The variable expenses are those that blow up every budget. I’m willing to bet that you may have forgotten to include the birthday gifts for your niece or grandmother in your last budget. Or did you recall to include the 7 of your closest friends’ kids that all graduated high school last June? Try to turn as many of these variable expenses into Fixed Expenses. For example, with the extreme variance in the Las Vegas weather… our electric bills spike in the summer months due to running our A/C and then our natural gas bills spike in the winter months due to running our heater. Our electric and natural gas companies took our annual spend and created a fixed monthly expense for us that allows us to spend the same amount each month of the year. Other examples are to setup a Subscribe & Save shopping list through Amazon that allows your regular purchases to be delivered right to your door and helps avoid the expensive Grocery/Costco/Sam’s Club trips that blow your budget by purchasing hundreds of un-needed items.
Money Saver: Never Finance a Toy
Just because you can afford a monthly payment for that new ATV/UTV, boat, motorcycle, or whatever else makes life a little more fun… don’t do it. Every toy that my family enjoys will be worth less next year than it is this year. Do not overpay with financing and interest charges on top. Consider this, why bother haggling to get a lower purchase price and then throw all that interest expense right back in the price tag? Take that monthly payment that you can afford now, put it away to purchase something that you can afford as well as have the time available to use readily and easily in the future.
Savings: Make Saving a Priority
No matter what happens this month, start an automatic savings account. Most payroll providers allow an option setting up direct deposits into more than one checking/savings account. I chose CapitalOne 360for my savings account because it is a virtual bank that requires a lag of a few days to access my savings. Mentally, I just know that I can’t withdraw from my savings in the very second that I want to, but if I need to make a purchase… I can transfer money to my everyday checking account and use it 3 business days from now. This also helps prevent impulse buys! Start with a number that doesn’t scare you to save and work on increasing that per paycheck saving every 6 months or 12 months.
These tips are the basis of my family’s household finances. After 6 years of living by these, my husband and I now save half of our net income each month. This has allowed us to put substantial down payments on our vehicles, purchase an awesome slightly-used boat in cash, and take many vacations each year. We only use our credit cards to earn points and pay off the balance each month.
Comment below some other tips that your family uses to simplify your finances.