A budget in simple terms is a way to keep track of finances. There is one principle to live by to make a budget work. Never spend more than what you make. This may be to some people an over simplification of the concept. Remember that a budget needs to be simple. It is a parameter that needs to be followed in our daily monetary transactions. It needs consistency and discipline. As a baby boomer it is my experience that money problems are the major cause of arguments within the family. So there is less tension when the finances are in order.
- The first order of the day for me is to pay down my existing debts and try not to take on new ones. I paid off my credit cards to eliminate interest payments. This adds money to my disposable income. Now I use credit cards that offer rebates. This either gives cash back or allows me to purchase things for the family to enjoy. Instead of adding to the debt my credit cards which are paid off every month provides a benefit.
- We downsized on housing. We sold our house years ago and now rent for a lower amount than what we were paying on mortgage. Among the other things we eliminated as a result of this action is the lawn care, association fees, property taxes and home maintenance. These expenses were tolerable before when there was a chance to gain equity. Since the market conditions have taken that away and income is tight I choose to keep the money in our pockets for future emergencies.
- I kept our cars and did not buy new ones. A new car needs a monthly payment. It also incurs higher insurance and registration expense. Granted an old car requires more maintenance. These expenses are worth it though because over an extended period of time you are saving money.
- We have cut down on eating out and brown bag as often as we can. We cook our meals at home. This does not just save money but also helps us eat better. Let’s face it we baby boomers are not getting any younger.
These previous activities are the major changes we have made in lifestyle. As you can see all those changes apply to our basic needs. Here are some of the minor changes we did. They generate savings that by the end of the month adds up.
Here are some more of the smaller changes we adopted.
- We buy used as much as possible. Furniture, clothes, books and videos are normally gotten from a second hand store. There is some savings there but part of the fun is rummaging together as a family.
- We have trained each other to let time pass to avoid impulse buying.
- We researched our phone needs and found that the cell phones are enough. We cut the land line and saved $50 a month.
- We use coupons and grocery memberships to cut cost on groceries and sundries.
I have learned that the times are uncertain. It is better to live below your means. It is simpler and it is crucial in facing future challenges that you may face.