Got No Dough - Saving Money in Slim Times

The first step in making a budget is to find out your current state of your finances.  Most people don’t have any idea where their money is going and that can be a dangerous thing.  If you don’t know where you are spending your money, you won’t have any idea where to start cutting back and therefore saving money.

First of all, figure out what money you have coming in.  This may be wages from a job, social security, disability, child support or any other number of sources.  Make sure to figure out the amount of money after taxes (or net amount).

Secondly, spend about a month keeping track of your expenditures.  Make sure you are keeping track of all expenditures - whether paid for by cash, debit or credit card.  If you don’t have a lot of time, you can keep your receipts together and log them at the end of the week.

Here are some guidelines for budget categories:

• Housing (Include rent/mortgage and utilities)
• Food (Groceries and meals out)
• Auto (Car payments, gas, oil, maintenance)
• Insurance (Car, home, life)
• Debt (Make sure you know who you owe money to)
• Entertainment (Movies, books, magazines)
• Clothing
• Savings
• Miscellaneous (Try not to put too much into this category)
• Child Care (If necessary)

Once you have this information you can start to see where your money is going and start readjusting your spending habits.  I’ll show you how to start your budget in a future entry.

I think one of the biggest causes of confusion when shopping is package size vs. cost. For example, you see a loaf of bread for $1.00 and another loaf for $1.29. Your gut reaction is to grab the loaf for $1.00 and move on with your shopping, thinking you got a great deal.

And that’s exactly what grocers and manufacturers want you to do. Meanwhile, you’ve just spent more than you should have because the cheaper package was a poorer value based on the cost per ounce. Let me explain.

Loaf A was $1.00 and was 16 oz. Loaf B was $1.29 and was 24 oz. If you take $1.00 and divide it by 16, you get .o625 cents (price per ounce). If you take $1.29 and divide it by 24 you get .05375 cents (again, the price per ounce). While a penny may not seem like much, in the grand scheme of things it can really add up.

Some supermarkets will take the struggle out of figuring these things out for you and will list the price per ounce on their tags. Others do not and you will need a calculator (or a PhD in math) to figure it out.

One last tip when comparing the price per unit - make sure the units match. I’ve seen two products side by side and one will say 16.4 cents per ounce and the one next to it will say $1.60 per pound. At first glance you’ll be shocked by the comparison - but after further looking into it you’ll have to do a little more math to get the better value.

Remember…the journey of saving a dollar starts with a cent.

As I was pondering the numerous tips for saving money I realized that there are a lot of things we can do to not only save money - but also save the earth.

Water conservation is a great example. Here in Southern California we are in a drought and I hear countless ads on the radio urging people to conserve water. I don’t think that is going to be enough to get people to ration their water more wisely - but we’ll see.

Here are 10 ways to save water (and therefore money!):

1. Turn off the water while you brush your teeth.
2. Run your washer or dishwasher on a shorter cycle. (Nine times out of 10, your stuff will come out just as clean)
3. Fix all leaks - it usually will just take a washer to fix it. They are very inexpensive and a novice can replace one.
4. Replace your showerhead with a low flow showerhead. Again, a simple fix.
5. Rinse all of your dishes at once instead of letting the water flow while you wash others.
6. Check to see if the flap on your toilet leaks. Put a couple of drops of food coloring into the tank and see if the color leaks to the bowl. Flaps are super cheap and super easy to install.
7. Water your lawn less - 5 minutes will do just fine. Even more important - turn your sprinklers off when it’s raining!
8. Put containers out when it rains to collect water for watering plants.
9. Install faucet aerators to your faucets to restrict their water flow.
10. Don’t let the water run while you’re washing your car.