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Thursday, March 6, 2014

Monthly savings add up all year

Money saving tips
Maintaining accurate financial records helps track savings
Annual expenses are sometimes difficult to evaluate, because of the peaks and valleys present throughout the year.  For easier comparisons, consumers use monthly tabulations to assess expenses incurred over shorter time spans. What most cash-conscious observers realize as they dissect spending details: Every month shows savings opportunities missed.  While incremental monthly savings are not always awe-inspiring sums, they add up over the course of the entire year, representing significant savings all-told.  

Fixed-costs are not subject to a great deal of change during the year; like mortgages and car payments, which generally have the same payment amounts each month.  Discretionary spending, on the other hand, is subject to your own monthly decisions, rising and falling according to what you choose to buy.  For ongoing monthly savings, and subsequent budget relief, consider the ways you spend money carefully, capitalizing on chances to save when you can. And balancing fixed costs with discretionary buys, keeps your cash flow in order, meeting all your monthly needs.

Fixed costs are the boss

Budget problems are natural events, occurring across most families as unanticipated expenses or other financial hardships arise.  However, when the same shortfalls show up month after month, there may be an intrinsic problem with the amount of cash flowing through your household.  To get the best idea of where you are coming up short, start with the fixed costs you're obliged to pay each month. Housing, for example, is a central expense that doesn't go away.  Sure, you may pay off your entire debt one day, living mortgage-free as a result, but for now monthly rent and mortgage payments represent one of your biggest fixed costs.  Since they do not vary in amount, and come around at the same time each month, use housing costs as the cornerstone of your budget.  We can't always buy cars outright either, so monthly financing charges apply to car buys too.  Added to housing costs, cars are one of the major fixed costs consumers address each month.  Student loan payments and other installment obligations add to monthly fixed costs for those paying them. While lowering fixed costs can be difficult, refinancing or taking on a roommate provide viable savings options for some debt-ridden home owners

Entertainment fuels discretionary spending

Long-term decisions drive spending on homes and cars, but impulse entertainment choices are made every day.  Unlike fixed costs, entertainment spending revolves around choices you make for the short-term, furnishing money savings opportunities when handled deftly.
Good times remind us why we go to work every day and make sacrifices for our families. When money is no object, appreciating the finer things in life ensues without consequences, but for cash-strapped families, entertainment spending can be a problem area.  Entertainment costs creep up on us, representing money we spend on television, movies, meals, concerts, theater and a host of other activities; not the least of which is an annual family holiday. Start with your biggest monthly bills, assessing things like television and phone service.  You may be able to shave off monthly savings by trimming your television commitment, ditching expensive premium channels along the way.

Other subscriptions should be managed with an eye toward savings too, easing recurring monthly spending.  Magazines, newspapers, internet services and other commitments are budget breakers, adding undue expenses month after month.  Health clubs and other membership organizations also tax spending, when services are not used enough to warrant ongoing payments.  Use parks and other cost-free facilities to get workouts in, rather than making monthly payments, especially if you are a hit and miss member. And even subscription movie services sometimes create unnecessary expense, duplicating access to content available elsewhere free of charge.

Image license: 401(K)2012, CC BY-SA 2.0