Many have found themselves with a sudden need to be thrifty. Whether a loss of a job or loss of extra income, or perhaps the addition of a new family member or some other increased expense or other circumstance has brought you to a point of needing to change your lifestyle and finances. If you are looking to begin a thrifty lifestyle let me give you a few basic pointers.
There is a primary realization you need to come to: only two things can change. First, you can change your income. Second, you can change your expenses. Hopefully your income is greater than your expenses. That is as basic as it gets. Bring in more than you spend.
There are not any magic bullets to shoot at the budget monster. No one (despite promises to the contrary) can give you a simple 10 page report that will instantly have all your budgetary concerns solved. When everything is boiled down the the bare basics it really is a matter of this simple formula. Income minus expenses equals your savings. If your savings is zero or greater you are OK. If your savings is a negative number you are not OK.
So, you will need to examine many parts of your life in order to begin the process of living a thrifty life.Don't expect this to happen automatically. You should plan on a few days to get a good hold on what needs to happen and then a lifetime of learning to be thrifty! But for now here is a simple 2 day plan to starting your thrift life.
We suggest you begin with writing out the expense side of your budget. We have many helps for this. You can download a sample budget here:Sample Budget Worksheets Examine your past few months and determine what your expenses have been for the last few months.
For your first evening do not attempt to find all kinds of savings. Just get a clear understanding of what you are spending. Determining your expenses is a good beginning. You may find some of the expense categories difficult to fill in. Do the best you can and try to be reasonable. Putting down $120 a year or $10 a month for car expenses is not reasonable. Be honest - brutally honest is best!
Next, separate expenses into three categories. Needs, Obligations, Wants.
Needs: Food, housing and transportation as well as any legally bound payment fit into this category. You can explore ways to cut the costs of your needs, but typically those take time. You can move to a less expensive house or sell your car, but these actions take time so don't look to cut these quickly.
Obligations: These are bills and any contracts you are obliged to fulfill. You must pay minimum balances, credit cards, cable, phone, and other obligations you have. Some of these can be cut eventually, but it will take time.
Wants: These are expenses that you have not yet occurred, but are part of your past budget expenses and routines. You go out every Friday night or go to the movies or buy clothing monthly. These are the easiest and fastest to cut, but often very painful and difficult to trim. Most individuals fail to realize the emotional energy it will take to trim the wants in their budget. Many lack the self discipline or emotional energy it takes to actually cut these expenses.
When you are finished with figuring out your expenses and dividing them into three categories you are done for day one.
Now, you will need to determine your expected income. For some, this will be very clearly determined. For others this will be a bit difficult to predict. Do the best you can. Once you have determined your income, you must now make the simple calculation of taking your yearly expected income and subtract your yearly expected expenses. Now you have a figure. If your figure is zero or a positive number you are either in good shape or are doing a poor job on your budget. If your number is negative you now have a goal for how much money you have to trim.
Some are working on this process because you have to be thrifty. Others are working on this project because you desire to save for a specific goal. Others want to be thrifty because you have a deep belief that you should spend your money wisely. For any of these reasons, you will now have a determined figure that will need to be reconciled.
Determine possibilities. You may want to examine ways to increase your income or you may want to examine ways to decrease your expenses or a combination of both. Here is where Thrifty Times is helpful. Look through the many articles and discover ways you can save and you may even find some ways to increase your income (selling online, writing good classified ads, etc.) You will also find great articles on how to emotionally face the battle and temptations that will come your way! Once you have your "number" and know the task before you begin to do the research and put into action income and expense adjustments until you get to your target number.
As you examine specific budget categories you will likely find Thrifty Times articles (you can search here: Thrifty Times Searches) giving specific advice on how to save in those categories. Another way to go through the articles is to see the Thrifty Times articles in a blog format. You can do that here: Articles in Chronological Order.
For some starting out your Thrifty life will be in emergency mode, desperately looking for savings. For others, this will be calculated and purposeful to fulfill a desired goal. Either way, I pray you will learn the ways of being thrifty and I pray that the Thrifty Times will be of help to you on this journey.
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Disclaimer - Articles are intended for personal information. Not intended to be financial, tax or legal advice. All financial plans as well as financial decisions, tax decisions and legal decisions should be made carefully and with the advice of a professional.