Living on reduced income: 5 strategies for spending less
Posted
Jul 14 2008, 10:00 AM
by
Karen Datko
Rating:
This guest post comes from Silicon Valley Blogger at The Digerati Life.
Our family has experienced a few changes over the last couple of years, which has required us to become much more watchful over our finances. My spouse left his job a couple of years ago to start his own company, while I worked at a stable job to assure ourselves a reliable income stream. I stayed with my job for quite a while despite a killer commute. But things got even tighter when I resigned this year due to the commute, for health reasons and in order to seek a better work/life balance.
At first, it seemed like a frightening decision that would impact our finances significantly. But it turns out, we've been able to roll with the punches. Savings we built up through the years (particularly during the dot-com boom) plus changes we've made to our spending habits have helped us adjust to a life with less income.
Now that the economy is on a downswing, we've learned to become even more fiscally conservative when it comes to spending. Here are some of the strategies I practice in order to stay frugal during these uncertain economic times.
Prioritize. I reflect on each purchase I make very carefully, regardless of how much it costs. Spending on a large item can take quite a bite out of your budget, so think about the outlay carefully before you commit to it. And while it appears much easier to spend on smaller purchases, they may actually be more hazardous to your wallet because your impulse buys can easily add up.
Developing a budget is key. Trim the fat by starting out on paper: Find out whether something is a need versus a want. Before buying anything, prioritize your list of desired purchases to get a better idea of what you can afford and how important a particular purchase is to you.
Defer. See if you can delay your unnecessary expenses and address them at a later time. To me, being frugal doesn't mean you need to say no to spending. It just means later. In the age of instant gratification, pulling out the plastic becomes a habit that can lead to financial trouble. There are a lot of bad ways to use credit, which can trap us into lifelong debt. Waiting just a little longer to buy something can spell the difference between solvency and bankruptcy.
Abstain. After all I've said about deferring your spending, you can still tell yourself no. There's a lot of stuff you don't really need and don't have to own. These are the things you forget about after applying the three-day rule: If you can get through a few days (at least three) without purchasing an item you've had your eye on, then chances are, you don't really need that item.
Substitute. Many successful frugalists are experts at finding stuff at half price. Before buying anything, find out if you can explore more-affordable alternatives. With a little bit more research, you may find other options at a discount. Using coupons, choosing generic over brand name items, comparison shopping, bargain hunting and thrifting are all fantastic ways to bring down the price of something you'd like to buy.
Delegate. There are ways to have someone else "pick up the tab" for something you may need so that you don't need to spend on it. This may be something you're not entirely comfortable with, but if you take the right approach, it can work out for you. Here are some examples of "passing the buck" with tact:
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Provide your loved ones with gift or wish lists before an event like your birthday or a Christmas gift-swapping party. This way, your family or friends will be able to zero in on gifts that you're sure to love.
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Consider asking for or accepting hand-me-downs. Some of my most cherished items have been hand-me-downs offered to me by family members.
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Resource pooling helps. When someone needs a big-ticket item, having friends and family pitch in to pool their resources together may be what it takes to pull off that big purchase.
These tricks have actually worked quite well for us. Our existing savings coupled with our approach to reigning in our expenditures have helped us to cope with the drop in our current income -- so much so that we're not noticing much of a difference in the way we live.
We're happy to be in our current situation because it's helped us become more efficient spenders. What's interesting is that over time, I've found myself less anxious about spending, because when I do spend, it's on the stuff that truly matters.
Care to share your own strategies for curbing your spending?
Other articles of interest at The Digerati Life:
How to afford big-ticket items
8 simple ways to save yourself a thousand bucks
Save money while paying your bills
