Thursday, June 18, 2009

Cheap and Cheerful's Budgeting Basics

When it comes to saving money or simply using your financial resources more effectively, there are two basic strategies to consider. Each strategy can lower your bottom line and increase your savings (or your slush fund!). Even a combination of these methods can simply focus you in on cash flow and help you become more conscious of your spending habits.

1. The DIY (Do-it-Yourself) Strategy
Does cash have a sneaky way of finding its way out of your wallet whenever you leave the house? Try this: Make your own coffee. (No Starbucks.) Cut your own lawn. (No mow, blow and go service.) Wash your own car, iron your own shirts, bring your lunch to work. You get the picture. Please do keep this in mind: Small changes with this strategy can add up to significant savings. But as you choose which "chores" to bring back to the domicile, do keep your sanity level in mind. For example, if I ironed my husband's shirts, we might save between $40 - $60 a month. However, I'd have to gouge my eyes out with one of the metal coat hangers. Touch ups, yes. Pressing shirts, no. Sanity over savings in that budget category at our house. Also, please do not try at-home eyebrow waxing. Leave that to the professionals.

2. Slash and Burn Strategy
Reduce the categories in your budget that have become inflated. Maybe $100 a month on take out used to be reasonable but now it's zapping your reserve for much needed car maintenance or long delayed home projects. Eliminate or reduce the take out food category and roll that cash into another column. You might also reduce your allocation to categories like entertainment, cable/cell phone/internet, or gifts. Freeing up your money for bigger and better things can be really satisfying.

Cheap and Cheerful wants to know: What two spending categories would you focus on if you applied either one of these strategies?

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