Excel 4 Ur Business

Believe me, it’s a rare event for someone to analyze her expenses and find she is spending less than she should be! Like 99% of people, you are likely to be faced with the prospect of balancing your budget by adjusting things so expenses are equal to, or preferably less than, income.

Some ways of reducing expenses, such as reducing or avoiding credit card and bank fees, are covered in later chapters. In this section I present a few additional tips and suggestions for successfully balancing your budget by reducing expenses.

Increase Your Income Wouldn’t the easiest way to balance your budget be to bring in more money? Sure, that sounds great—but actually doing so is not that easy. You could ask for a raise or hope for a promotion, and good luck to you, but don’t count on it. How about a new, better paying job? That’s a great idea if you can manage it, but few people can. A second part-time job might be a temporary expedient to help pay down some debts, but it’s not something many people want to do for the long term. The unavoidable fact is that budgets are almost always balanced by cutting expenses.

Watch Impulse Buying

The shops and catalogs are filled with great products of all kinds, and it’s easy to just pull out your credit card or checkbook to buy that latest new item that caught your fancy. Danger!! It’s just this kind of impulse buying that gets a lot of people in trouble. When the urge hits you, think.

First think, “Do I really need this?” In most cases the answer is definitely no—your life will go on just fine without it.

But of course life is not just about needs. Buying things for pleasure and enjoyment is perfectly valid, too. Then you need to think about how much enjoyment you will really get from the item you are considering. When you really think about it, a lot of our purchases do not bring that much lasting pleasure to our lives. Will this $50 item just bring you a short-lived distraction and then be forgotten? Or will it really enhance your life and make a difference over the months and years? Perhaps the item might be less expensive if you wait, as is the case with most electronic equipment?

You also need to recognize and resist the psychological justifications many people use for purchases. Perhaps most common is the “I deserve this” approach. Perhaps you do, but that’s hardly justification for buying something you cannot really afford! I figure that I deserve a new red Ferrari, but I still don’t have one! What you really deserve is financial comfort and security and making unnecessary purchases for psychological reasons is not the way to get it!

Look for Sales

Some people love looking for sales, others hate it. Either way, there’s no doubt that sales can be a great way to trim your expenses. It takes some patience because you might need to wait for a sale rather than buying something right away.

Here’s a good example. I recently needed some clothes and instead of rushing right out to the department store, I kept my eyes peeled for a sale. A few weeks later I found just what I was looking for at an outlet store. For less than $150 I got pants and shirts that would have cost at least $700 at regular prices.

Of course, not all sales let you save so big, but they’re still worth looking for. Food, clothes, electronics, books—most everything you shop for is on sale at one time or another. For nonperishable staples, such as soap, canned food, and napkins, buying in bulk from a warehouse store can produce big savings (but make sure that any membership fees do not cancel those savings!).

Learn to Cook

There sure is something nice about going to a restaurant. A nice selection of food, no cooking, no cleanup—no wonder Americans eat out so often! But let’s face it, restaurants are expensive. Even the moderately priced places will add up if you eat there regularly. Let’s run some numbers for John Doe’s restaurant bill:

• Lunch at work twice per week @ $8.00 = $64.00 per month

• Dinner out three times per week @ $15.00 = $180.00 per month

• Pizza delivery once per week @ $12.00 = $48.00 per month

That’s $292.00 per month or over $3,500 per year. Yikes, sure seems like a place you could cut back.

Of course, eating at restaurants is sometimes about more than just eating. It might be a chance to socialize with your colleagues at work or to relax with friends at the end of a busy week. Think about your restaurant habits and decide which restaurant visits are important for work or social reasons and which are for convenience only. Then you can start cutting back.

But wait, you still have to eat. Yep, and that means fixing more meals yourself, including “brown bag” lunches. Basic cooking is not at all difficult and there are plenty of sources of information, including your family, friends, books, and classes. A modest investment in kitchen equipment can lead to big savings.

A budget is a very important part of taking control of your finances. With that under your belt, we can move on to a financial tool that almost everyone uses—and some people misuse—your checking account.

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