Expenditure Management As A Strategy To Reduce Household Spending

‘Tough times never last but tough people do’ – Robert H. Schuller

The parlous state of the economy in recent months has brought to the fore, the need for households to manage their income and expenditure wisely in order to stay solvent. With reports of over 8 million jobs lost since the recession set in, many families have been impoverished, with some having to sustain themselves on social security. There is therefore need for serious belt tightening.

Even those who still hold their jobs are not left out as they must recognise the need to adequately prepare to weather the storm if it comes their way. 

The following strategies are suggested based on their successful application.

BUDGET

Households should cultivate the habit of drawing up budgets on a monthly basis. This would naturally highlight the income, prior commitments such as mortgage, debt servicing, rent etc. With these taken out, recurent expenditure should be the next area of focus. These will include electricity, telephone, internet, cable, gas, heating and water, insurance bills etc. Other important areas to look at will include grocery and transportation (gasoline and car maintenance) bills. This list, though not exhaustive, will serve as a good basis for analysis. 

In drawing a budget, the easiest way is to be guided by previous expenditure profiles. Bills of previous months will come in handy here and will also serve to highlight the areas that consume the highest resources.   

With the analysis done, the next stage is to scrutinise your list with a view to identifying those expenditures that could be eliminated entirely, scaled down or deffered to a later time. If a household has engaged in an expensive pastime which has been analised not to add much value to the family, such pastime should naturally be a subject for elimination while other activities may also be scaled down to fit into smaller budgets. As a straregy to reduce incuring more debts or reducing existing ones, some projects that had originally been scheduled to run simultaneously may be staggered based on priority.

The following rules may serve as a guide to saving costs.

Gas, electricity, heating and water

  • Use energy saving light bulbs (eg. LED). They last longer and save up to 60% energy
  • Turn heating down a few notches. Note that a 1 degree Celcius reduction on the room thermostat will translate to a reduction of up to 10% on your bill. Thermostat should be set at 18-22 degrees Celcius (65-70 Ferenheit)
  • Look out for energy saving appliance when replacing and always switch off appliances such as computers, TVs etc. by the switch as they tend to consume power when on standby. Remove chargers form sockets when not in use
  • Use natural lighting whenever available by opening the curtains. Minimise use of electric bulbs and switch them off when not in use
  • Consider bulk cooking. Cooked items could be packaged and frozen for quick heating whenever needed. This saves energy used in repeated cooking. Also consider using pressure cookers
  • Insulate your walls and loft if affordable. This will save you a lot of money on the long run
  • Pay bills on time in order to avoid paying penalties

Food and Groceries

  • Never shop when hungry as this may affect your judgement and make you buy excessively and needlessly.
  • Always make out a shopping list and endeavor to stick to the list. Avoid impulsive buying. Peaple tend to buy things they don’t need just because they are cheap. This could be  a drain.
  • Always shop with a budget of how much you want to spend.
  • Bulk purchasing is adviced as this will save you the cost of several trips to the store. Once a week is recommended.
  • Buy toileties, tissue paper, soaps etc in bulk when they are on sale.
  • Reduce eating out as this is not cost effective. Consumption of seemingly cheap junk food is u

Banking and Insurance

  • Banks are known to have various charges for their services. This may be a good time to compare what your bank charges with those of their competitors
  • The same goes for Insurance companies. Premiums vary from company to company. Shop around and see if their are better bargains around
  • Reduce financial borrowing or credit card usage in order not to incur interests and other charges

Gasoline

  • With the high cost of gasoline, it is important to reduce trips where posible. 
  • Consider trading in your gas guzzling truck/van/SUV for a more fuel efficient model.
  • Consider moving your children from that distant school to a nearby school in order to save distance travelled to drop and pick them up daily. You may also consider moving them to one that has a school-bus service or to a public school.
  • Where posible, take a walk instead of driving. This will not only save you money, it is good exercise for your body and helps to reduce environmental polution.

Telephone, Internet, TV and other entertainment

  • Always compare prices of these services in order to get the best bargains available. You must note however that ‘cheap’ could translate to inferior quality sometimes.
  • You may look out for bundle packages or special bargains
  • Contributing refreshments among friends to view a rented DVD at home instead of going to the cinema may translate to a lot of savings. 

No matter how little you are able to save on each item, always remember that ‘little drops of water make the mighty oceans’