Everyone wants to save money these days, however many people do not know where to start. Here are some tips to get you started on  your own frugal path.

1. Write down EVERY expense, even that pack of gun at the gas station. Do this for a 2 to 4 week period, then look at all your expenses and evaluate where you are spending your money. Be honest, nobody will see this except you.  When I began doing this I bought a small notebook and kept it in my purse. You will be able to see all the little ways your money is leaking out of your wallet and where you need to “tweak” your spending.

2. Either on paper or on your computer make a list of all your expenses. It is helpful to make two categories: one for bills/expenses you have to pay each month and the ones you do not. Write down everything. If you smoke, write down what you spend each month for cigarettes. Be sure to list everything so there are no surprise expenditures that will ruin your spending plan you will make later. Next you need to calculate your monthly income from all sources. This could include child support or any sporadic payments. Add them up and get your total montly income. I used the amount after taxes, simply because then I knew how much I had in my pocket to spend. Subtract your expenses from your income and this amount is what you have to spend each month.

3. If you have any bad debt, i.e. anything other than a mortgage/rent, insurance; make a list of these debts. This will enable you to know exactly how far in debt you are. This step can be emotionally painful, but be honest. Sugar coating reality only brings on more debt.

4. The money you have left after you pay your expenses needs to be put to good use. Allocate some for savings and some to pay off your debt ( if you have any. If you don’t - CONGRATULATIONS! - you are one of the lucky few these days).

5. In order to live we need shelter, food, power, water, clothing. Our kids needs clothing and food, they have medical and school expenses. We need money for transportation, whether it be our own vehicle or public transportation, to get to work or wherever it is you go. Now is the time to look at all your expenses with a painfully truthful eye. You need to pair down your spending to create more savings so you can pay off debt, store money away for the future; whatever is it that is important for you and your family. Look at your spending habits and decide what you absolutely have to have and what you can live without. Remember, it will take some sacrifice on your part. Do you need those trips to the local coffee house or can you make a pot at home yourself? Do you really need to eat out or can you cook at home for a cheaper, healthier meal? If you already have a closet or dresser full of clothes, odds are you don’t need anymore. Do you need to have every cable channel available or could you shave some services off your cable bill to save money?

1 Comment »

1. 

   AWESOME Article!!! Great info!

   With Empowering Regards,

   Tonya

   Comment by Tonya Ramsey — April 28, 2009 @ 2:17 pm

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