What to Zero In On When Curbing Family Expenses
I am just a man.
I say this at the outset because once you read these saving tips, your response will be:
"These are brilliant and so simple, he must be a genius."
To which, my response would be, "Yes, they are brilliant and, yes, they are simple, but, no, I am just a man."
Every year, each day, in most everything we do, saving money is on our minds. For some of us, it may not be readily at the forefront, but believe me when I tell you, it is firmly lodged into our mind-set.
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Now you have a family -- and congratulations on that. However, you thought you were keen on saving money before? You ain't seen nothin' yet. Each financial decision from here on out weighs against how it affects the college fund/inheritance/general upkeep and maintenance (yes, we'll go with a car analogy) of your children.
Take a step back
Step one: For at least one month, type into a spreadsheet every item, big or small, that costs you money. The only way to determine where you can save money is to determine where you spend it. This means everything down to the last dollar. Not just rent, utilities, or gas, but a breakdown of your grocery store purchases, lattes, parking tickets, and iTunes downloads. Your bank takes care of the legwork for you on this if your purchases are by debit card.
Step two: Strike from this likely to-be eye-opening list anything deemed unnecessary. Sure, this might not hit on the big-ticket items, but we'll get to those later. For now, look over what you can cut back on with ease. Seeing how much a month's worth of coffeehouse coffee sets you back should be enough to spur you to make coffee at home. Make a running grocery list, with a new one starting the moment you return from shopping. Categorize your items as "need" or "want." and stick to the list to eliminate unnecessary purchases.
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Of course, you want to keep your family warm and confortable under your own roof, but that doesn't mean you should take for granted what happens under that roof when you're not there. Utilities are big expenses, yet when you bring these costs to the forefront of your mind, costs can be chipped away.
If you're lucky enough to have a heating and cooling system in your home, invest in a programmable thermostat and pay close attention to your thermostat as the weather outside blows hot and cold. Your winter settings for when you aren't in the home shouldn't drop so low that it requires extra energy, extra time, and extra money to get to that finely tuned comfort level for your return. Some wise investments that cut costs in the long run: ceiling fans and good insulation.
A good rule of thumb when it comes to household lights and other electronics is to use electricity only when you need it. This seems remarkably obvious, but consider: Of the total energy used to run home electronics, more than 40% is consumed when appliances are off. Whatever is plugged into a wall outlet uses electricity even if it isn't connected to a device on the other side. Luckily, voltage adapters come with on/off switches and can be unplugged to account for a lot of your unused equipment. Also, be mindful of leaving lights on only when needed and start subbing in energy-efficient bulbs starting yesterday.
You would be wise to contact your service providers for gas, cable, phone, and Internet to see how you can update your accounts to be more fiscally responsible. Providers often have great new deals to attract new subscribers, and it doesn't hurt to ask what they can do for their existing, loyal subscribers. Gas and electric providers sometimes offer onsite visits to see how to be more energy efficient. This could help if you are unsure how to adjust your water heater and other items on your own.
Another worthwhile call is to your insurance provider for a review of your various policies for home, health, life, and car. If you have these sourced out to multiple carriers, it can make sense financially to combine all under an umbrella policy. A big item that is often left to chance is home or renter's insurance. If this is rolled into your home payment, you may not realize just how much you're paying until you take a moment to review.
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Out of the closet
While you're reviewing possessions, take this time to pull every piece of clothing out of your closet -- yes, even those up in that corner -- so they are front and center for your eyeballs. Look at what you already have and what you probably forgot, and you'll rethink that craving for some retail therapy. Reorganize your wardrobe to bring seasonal items to the forefront, and you might feel like you have a whole new wardrobe.
Well, you can dream.
Give your credit some credit
Be active, not passive, when it comes to your credit. Remember that your credit score comes into play with your biggest life decisions, be it home, auto, or employment. Low credit scores result in higher interest charges for all types of debt, including credit cards and home loans.
According to a study by credit card comparison site CardHub.com, borrowers with a FICO credit score (the score used for most consumer lending decisions) of 700 save an average of $648 in interest on their credit card, $1,392 on their car loan, and $2,340 on their mortgage each year, compared with borrowers who have scores below 620.
Pull your credit reports and review them with a fine-tooth comb -- or, if said comb isn't available, just look at it really, really closely. Challenge anything that looks questionable. And it should go without saying, but we will still say it: Pay off revolving debt such as credit cards, avoid the virtual act of throwing money away on overdrafts, and then remove those cards from your wallet or purse.
Lastly, how about waiting 24 hours before making any non-essential purchase? It's the purchase equivalent of that deep breath taken before signing on the dotted line for a home loan or car purchase.
Jim Staats is a technical support analyst at Manilla.com, the leading, free and secure service that helps consumers simplify and organize all of their bills and household accounts in one place online or via the four-star-plus customer-rated mobile apps. He has a bachelor's degree in industrial technology from California Polytechnic State University at San Luis Obispo. Wedged between stints supporting products at firms including Intuit and Sybase, Jim worked as a journalist reporting on real estate, business, technology, and other issues for print and online publications.
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