Wednesday, May 20, 2009

How Much Do You Spend?


By James Stevenson, Extension Specialist, Pinellas County Extension

In tough times, it is clear we all have to make certain financial sacrifices to our “fat-times” spending habits. While no one would consider recommending cutting spending on absolute essentials, when times are lean it is necessary to evaluate what expenses really are necessities and what we might have come to merely view as necessities.

In our recent “instant gratification” societal mode, it has been possible to procure goods and services despite the fact that we simply do not have the cash at the moment to afford them. Credit has been handed out by the BUCKETFULL and we are now seeing the results of living beyond our means.

So where do we start in paring down our expenses and getting out of credit debt? First it is important to create a base-line of spending habits. There are two types of household expenses: Fixed Expenses and Flexible Expenses.

Fixed expenses include those that are paid on a regular basis and are essential to the basic operation of your household. These expenses include: utility bills, rent or mortgage, child-care, loan repayments, insurance, etc.

Flexible expenses include those that are more under YOUR control as to amount and frequency of payment. These expenses include: food, entertainment, subscriptions, memberships, clothing, gifts and donations, etc.

While some families see certain items in the flexible category to be life-and-death essentials, in lean times it is necessary to “zoom-out” and look at your financial situation in a broader sense and with a view to your ability to maintain or sustain a level of spending that will not get away from you.

See the link at the end of this post for a handy worksheet that will enable you to find out just where your money is going and how to differentiate between fixed and flexible expenses. It is important to work together as a family to make sure all involved are aware just what “living within our means” really means; and that every household member may have to make some sort of sacrifice for the greater good of financial sustainability.

This newsletter will continue to bring you ideas on how to make the most of less, and as long as there is a feeling of solidarity within your family, the small, shared sacrifices will add up to savings during these tough times.

How Much Do You Spend?
How Much Should We Spend?
Cutting Costs to Live Within Your Income


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