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Struggling to make ends meet

Jan 03 2014 11:14
Fin24 has received an urgent request from a user who is struggling to meet her household expenses. She writes:

I need some financial tips urgently on how to make ends meet. Where can I cut down, and what do I buy to get more out of groceries? I also need a budget frame and ideas to get more for less.

Ann Wilson, CEO of The Wealth Chef, a company which teaches people to become financially free, responds:

The first step in getting more out of your money is to really know where it has been going. Often we think we know where our money is going - but there may be leaks we are unaware of.

If you haven't yet created a monthly spend tracker where you review all the money that has gone out of your life in the past month and where it has gone, do this first. If you use a debit card or credit card, you can just download all your transactions from your online bank and put these into a spreadsheet.

Sort your transactions into different spending categories, like mortgage/rent, utilities, food, entertainment, etc.

If you use cash a lot, you need to start tracking where your cash is going. Keeping a little notebook with you - jotting down what you spend into these categories as you go along is the easiest.

Once you have a good idea of where your money has been going, you will see what areas you can focus on to get more value. Choose one or two categories and get really creative as to how you can get more value and find other ways to meet these needs for less money.

You may also find whole areas of spend that you really don't get much value from - this could be things like gym memberships, TV contracts, etc - just cancel these.

Things we can all do without

The following are some areas of spending where most people can squeeze out between 10% and 30% without reducing their standard of living:
• Bank fees - change to a low-cost bank account.
• Interest payments - destroy your debt.
• Insurance - you can save significantly on your life, home, car and medical insurance. With one private client I found 16% savings in just this one area alone.
• Magazines - get annual subscriptions for the magazines you really read and get value from, and never buy them from the corner shop again. Subscriptions will save you up to 70% of the cover costs. Better yet, agree with your family to give magazine subscriptions to each other as gifts.
• Culinary comfort - stop buying prepackaged, ready-made and take-away meals. Not only are they full of preservatives and other bad things, this convenience costs you over 120% more than the base ingredients. When you cook, double the quantity and freeze the extra amount, ensuring you already have your own pre-prepared meals available for when you don’t have time or don’t feel like cooking.
• Gym memberships - if you use it, fantastic. In reality, fewer than 87% of people regularly use their gym. Cancel the membership and rather go exercise in your local park.
• Other memberships, subscription programmes - look through your direct debits and question whether you use them all.

More ways to save

Other expense-slashing tips include:
• Buy a filter for your tap water instead of drinking bottled water.
• Challenge the grande double shot skinny no foam latte culture. How much are you spending on concepts that barely existed 15 years ago? Do you really need that cappuccino every day?
• Take your own lunch to work.
• Make your hairdo last two weeks longer than you normally would. Instead of getting it done eight times a year, have it done five times.
• Know the different times when your landline and mobile phone rates are cheaper, and use skype.
• Turn off appliances and use low energy bulbs to reduce your electricity bill.
• Install solar heating in your house.
• Maintain and service your car regularly.
• Turn down the temperature on your water geyser.
• Go to movies on discount days.
• Get books from your library.
• Start a book club.
• Eat fruit and vegetables that are in season.
• Make your own cleaning products that are cheaper and better for you and the environment - I’m going to send you a great list of these.
• Go to restaurants that let you bring your own wine.
• Do your monthly grocery shopping online with prepared lists.
• Plan your weekly meals.
• Buy generic products.
• Ride to work. Buy a low-cost scooter or, better yet, a bicycle to get to work.
• Set your pool filter to run during off-peak electricity times.
• Base your week's menu on sale items.
• Buy your household items on sale and from bulk wholesalers.
• Buy other people's doodads from the classified, bid or buy, Junk Mail, etc.
• Use the internet to know your prices and values before you buy.
• Get at least three quotes for all services, insurances, and major purchases.
• Never buy a new car. It loses up to 20% of its value as soon as you drive it off the showroom floor.
• Check out charity shops, second-hand merchants and garage sales.
• Consider giving up some of your vices such as smoking, alcohol, gambling, sweets and chocolate.
• Christmas, Eid, Diwali are not emergencies. Spend half as much as usual on these holidays. Talk openly with your family and friends and share with them your vision for financial freedom.
• Use your ATM card a planned number of times in the month to withdraw the cash you need.
• Once a month, have a no-money Sunday. This is a fun day when each person must come up with an idea of having a fab day without spending anything. Make and fly a kite, have a picnic, watch airplanes, walk in a forest.

Make your own list of cost-saving ideas. Get the whole family involved. There are also a number of great websites that deal in expense reduction. Surf the net and get inspired. Once you start, you will be amazed at how much extra money you can find without reducing your standard of living.

All the best and enjoy squeezing more out of your money.

Renée Marais, an independent debt counsellor in Pretoria (NCRDC1780), also gives her top ten tips for saving money:

Pay a 5% to 10% amount of your salary into a 30 day savings account for short term emergency or holiday funds;

Pay your absolute essentials like housing, transport (for instance car, bus ticket and petrol), utilities school fees and insurance;

Have a weekly planned menu and only buy what you need and use it until it is finished (Google budget meals for ideas on meals);

Buy fruit and veggies when in season;

Have one day a week meat free;

Avoid convenience stores as you always pay more;

Write down what you spend;

Make use of electronic payments and avoid using the ATM too often as the charges add up;

Pay your debt in time;

Exchange items like magazines, clothes, kitchenalia and furniture with friends.

For a good monthly budget, contact a debt counsellor to assist you for a minimal fee, some will even do it for free.

You can find a registered debt counsellor on www.theDCI.co.za or www.ncr.org.za.

 - Fin24

Do you have a pressing financial question? Post it on our Money Clinic section and we will get an expert to answer your query.

Disclaimer: Fin24 cannot be held liable for any investment decisions made based on the advice given by independent financial service providers.

Under the ECT Act and to the fullest extent possible under the applicable law, Fin24 disclaims all responsibility or liability for any damages whatsoever resulting from the use of this site in any manner.





money  |  money clinic  |  debt
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