How to Live Large on a Tight Budget
Conventional wisdom says that money doesn't buy happiness, but anyone who's been broke knows that being happy comes a lot more easily when you're not living without the things you want or need. A tight budget doesn't have to equal sacrifice, but it does take discipline and a little creativity to live large on a limited income. It's a threefold process -- diverting your funds to the things that give you the most pleasure, eliminating expenses that serve no good purpose, and spending less on both necessities and the fun items.
Must-Haves vs. Don't-Needs
If you're living on a tight budget, you're probably not going to be able to afford both a fantastic home and a luxury automobile, so you've got to make a choice. Which is more important to you? If your home is your castle, you might want to trade in your wheels for something less expensive so you can put the money you save toward fixing up your home. If dining out is your thing, consider moving to more modest digs so you can spend more on going out and doing it well.
Compromise Without Relinquishing
Some expenditures are necessities -- there's just no easy or comfortable way to get around spending on them. These can range from groceries to your electronic arsenal -- your cell phone, tablet or computer. You must eat, but unless you're a gourmand and you love cooking lavish meals, you could probably compromise on this expense and feed your family a little more pasta. Living without a cell phone would probably be tough, so consider giving up your landline or look for a less expensive service provider for your cell. This frees up money for other pursuits.
Managing Your Money
Harry Hurley, former branch manager of National Westminster Bank in New Jersey, points out that both credit cards and maintaining bank accounts siphons significant cash from your budget. "This is money that could be put toward much better, or at least enjoyable, use," Hurley says. He suggests shopping around for a bank that offers no-fee checking. Credit unions often offer free accounts to their members, and most banks waive fees if you arrange for direct deposit of your paychecks. "ATMs are the greatest culprits," Hurley warns. "If you hit the ATM often enough, the fees can really add up." According to Bankrate.com, the average fee for an out-of-network ATM transaction is more than $4. If you regularly use credit cards, try to pay them off each month so you don't incur interest charges. As of May 2014, lenders charge between 13 and 16 percent, and that's if you have good credit. "If you don't already have good credit, you probably will soon enough if you get into the habit of paying off your cards each month," Hurley says.
After you rearrange your budget to direct your available funds to those things that give you the most pleasure, the next step is to purchase them at bargain prices. If clothes are your thing and you love designer labels, try consignment stores or do your shopping right after gift-giving holidays when prices are marked down. If you're a gourmand, plan your meals around your market's weekly sales. If your grocer is selling lobster tails at half price, this might be the week for a seafood fest. Try clipping coupons -- it's tedious but it adds up -- or shop on the Internet. You can often get great deals that aren't available in the merchants' stores, but watch out for shipping fees.