Short-Term Budgeting Tips
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Getting your household spending under control requires having a spending plan in place -- a budget -- and most important, following the plan as closely as you can. A good way to get started with budgeting is to focus on the short-term: the next three months, for example. You probably have a good idea of what your income will be over that time period, so the budgeting process will focus your attention on expense control. It will help you keep your monthly expenditures below your income so you can begin contributing to your savings account and not have to go into debt to fund monthly expenses.
Don't Eat Your Way Into Debt
For many households, food can be the largest monthly expense after mortgage or rent payments, so it is a likely place to save money in your short-term budget. Create a menu around weekly grocery store specials and buy only what's on your list. Shop after you've had a meal so you aren't inclined to fill the cart just because you are hungry. Don't assume the merchandise on the end caps of the aisles are sale items -- the store puts them there to draw your attention. Stretch expensive meats and seafood by using them sparingly with a savory sauce over rice or pasta. Save by cutting out meat altogether and going vegetarian two or three times per week. Buy single-serving size packages of snacks. On a per-ounce basis they're more expensive, but you'll limit how much of each item you eat.
Turn Learning Into Saving
Your discretionary spending takes place during your free time, so by changing the way you spend your free time and choosing activities that don't cost money, you can save money. Sev Meneshian, CFP, of Public Retirement Planners, offers a creative way to cut spending in the short-term: "I would dedicate a Friday or Saturday night for a month or two to taking a free online college-level course. Going out on the weekends can be costly and by staying in it's easier to avoid the expensive dinners, drinks and entertainment that accompany a night out. Plus you'll have the opportunity to enhance your skills and knowledge about something you're interested in."
Clothing Is a Necessity, Not an Impulse Purchase
Statistics reported by the American Apparel and Footwear Association show that the average American consumer bought 62 garments in 2012 at a cost of $898. You can save by buying fewer items, spending less on each item -- or both. Clothing can be a budget-buster simply because consumers don't include it in their monthly budget -- there's not a purchase plan in place for clothing. They go to the mall, see something they like and buy it.
In your short-term budget, separate the clothes you really need to buy during the month from those you simply want. You may be surprised that over a three-month period, your expenditures in the "want" category were much higher than you supposed, and can be reduced in future months. Planning where you will buy clothes should be part of the short-term budgeting process, too. Many frequently purchased items such as socks, underwear and T-shirts can be purchased at discount stores, freeing up budgetary dollars for select items that make you look good at work or on important social occasions
Turn It Up or Down
Short-term seasonal changes to your gas, electric and water usage can bring you savings. Turn the thermostat down five degrees in winter and wear a sweater to stay warm. In the summer, you can use fans as long as possible instead of turning on the air conditioning. Water heaters can be turned down several degrees as well. To conserve the hot water, wash clothes in cold water only. Whenever you leave a room, turn off the lights. Track how these changes lower your expenses. Compare what you spend during a three-month period to what you spend over the same three months last year.
Look Ahead and Be Ready
Some expenditures don't require saving over a long period of time to pay for them. As you plan a vacation for example, you can set aside money for several months to cover the cost. The key is to look ahead and plan. Garrett M. Prom, founder of Prominent Financial Planning, advises, "I find most people are reactionary -- meaning an expense comes up and they figure out at that time how to pay for it. Vacations are the main culprit for this sort of reactionary spending. We know the vacation is coming so let's set aside the money in advance instead of the other way around. My clients have commented that not only do they know this is better for them, but they enjoy their vacation that much more knowing they have the money to pay for it up front." Evanston, Illinois