Simply Junior

It’s hard to ignore the financial changes that have occurred in the last few years. Over the past five years, the housing market has failed, the job market has folded, and more and more young Americans are finding the economic climate necessitates going back to school or moving back in with their parents. Times are changing, for better or for worse, and the way people are spending their hard-earned money is changing along with them. Below are just a few ways it has changed in recent years.

A Changing Society

Society’s spending habits have changed significantly since 2005, which many consider the high-water mark of our debt-driven purchasing ways. Americans as a rule were more likely to charge things to credit, and to make more frequent and larger non-essential purchases: big televisions, the latest entertainment equipment, second cars, and the like.

Now, however, the paradigm has shifted. Studies suggest that Americans are now more interested in making fewer purchases, and making them with cash rather than on credit. Mid-level extravagant spending is down, and consumers are back to focusing on basic purchases.

Hard Habits to Break

Spending extravagantly on consumer goods is a hard habit to break. People are often reluctant to give up certain consuming habits, even when they become difficult to maintain, or even downright impossible. However, it is important to remember that humans are incredibly adaptable. While change may be hard initially, once it becomes a regular way of living.

The Benefits of Frugality

Studies have shown that living frugally actually has a number of benefits. By saving for larger purchases, we are more satisfied with them, and for longer. We enjoy the process of desiring something almost as having it, and by saving up for something and then purchasing it, we extend the enjoyment we take from it.

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In many cases, a debt-free lifestyle is prompted by one person. Generally it is not because other family members no not want to find debt freedom, but because of time constraints and the priorities of people. It can be very discouraging to have one person do all of the work only to find that the rest of the family is not participating.

While there is no sure-fire way to physically change any other person’s habits effectively, there are some things you can do to help expedite the process and be more helpful in working with family members to get on the same debt-free page. Here are some tips for helping convert the spenders into savers:

Be The Example

Depending on the rank in your family, you may be in a key position to have everyone one already following other examples you set each day. But it is important to understand how to be a good example when it comes to leaving your debt behind. You need to be able to control your emotions when trying to delegate financial responsibilities around the house, such as clipping coupons, controlling impulse buys, and teaching more frugal ways of living. If you can prevail with a cool head and implement recognition for a job well done, what you preach might be practiced more often by others.

Make It Visual

As a family, it can be important to set financial goals and share them visually. Perhaps a chart on the wall showing the savings each person made possible that week will work. Maybe additional savings that aren’t directed towards paying down debts, can be put into a family vacation fund so even the younger kids can feel included in the lifestyle changes of the family. Visuals hung in a common areas can help keep all family members on track and serve as a daily reminder of goals.

Revisit Goals

It can be a very refreshing thing to look back on past goals and see how much you have accomplished. Seeing results can often be a constant motivator for continuing to practice better money habits. Once original goals have been met, it can be fun to create new ones on an ongoing basis.

Understand Different Motivators

Some couples find that they have entirely different views on money matters. There is nothing wrong with that provided you each make a concerted effort to understand where each other is coming from. Finding out what motivates your partner to save and strive for financial freedom can make a huge difference in your efforts to live a debt-free life together.

Change Habits Together

If you find that on person is better at managing the checkbook while the other is better at finding deals at the grocery store, change roles and money habits together. Many times couples find that only one person takes a real responsibility for the bills getting paid and the financial health of the family. By combining efforts, you are likely to produce a more effective result.

Remain Flexible

This bit of advice is mostly for the person used to being “in control”. Once responsibilities are split amongst partners, there can be a normal tendency for that person to feel still in control, making it easy for arguments to start over small issues. Remaining flexible and open-minded allows you to explore new ideas and make the other person feel less scrutinized and under pressure to do things your way.

There are only limited ways to have more spending money. One way is that you need to have more income. Income comes in the form of wages, salary, rentals, interest and saving. Spending money can come in the form of essential expenses as well as spending on wants and desires. There are ways however, to reduce spending in order to have more money to spend. What? Sounds gibberish…let’s take a look.

A budget will quite often help to free up cash. If you are unaware of your expenses and how it relates to your income this is the most important step of all. Completing a budget will show up your spending habits and give you an idea of just what you actually do with your money. Once you know this you’ll be surprised at how much you can save to allocate to other types of spending. Take a serious look at your power account, your telephone bills and other utilities. Phone the competitors of your usual supplier and see if they can give you a better deal. Often a provider will give you an incentive to change your services to them. This might be in the form of a deposit of say $50 on your first account or a special reduction on rates for a set period. It’s worth taking a look but make sure you are getting a better deal at the end of the day. Grab the remote and look at the cable TV channels you have. Which ones do you have access to that you never watch? Make a list of all of the channels that you can access. Mark off the ones that you watch and those that you don’t. Contact the cable company and see if you can reduce the costs by changing the package you are on. Review your life insurances. While there are certain things that require insuring there may be better options since you took the policy out. Do this with an adviser and don’t just cancel policies. Sometimes you may find premiums have come down or the amount of cover is no longer right for you. If you haven’t reviewed insurances for a long time it’s time you did. Also review your general insurance policies. If you take out vehicle insurance, contents and home cover with the same company you normally get a discount. You can also lower premiums by taking on a higher excess.

These five tips are a start to reducing your expenses so that you have more spending money.

As the credit crunch is upon us people are being increasingly more careful about how they spend their money. Yorkshire Bank recently carried out a survey showing that 3 in 4 people are more conscious of their spending habits, and are no longer tempted by the “buy now, pay later” offers. They go on to say that they would rather save up for a purchase as opposed to having it instantly on credit. This is largely due to the lack of cheap credit currently available.

84% of the people that took part said that they enjoy a purchase more when the payment has been made outright, as they feel they have earned it and can better justify the need for the purchase.

Psychologist Phillip Hodson commented on the recent changes in buying cultures, saying “People are often happier in times of austerity. It is a well known psychological trait that delayed gratification can generate a deeper sense of happiness – we might call it ‘saver satisfaction’ or the ‘joy of thrift’, yearning makes the heart grow fonder.”

The age of spontaneous buyer is over. As prices have increased people have become thrifty with the purchases they make, no-longer buying on a whim, but shopping around to find the best deals. This is actually a good thing from the customers point of view, because they are becoming more aware of the savings that can be made, which naturally transfers to all areas in which savings can be made, such as utility bills at the best price, or savings accounts that pay the highest interest rates.

Debt is always undesirable and everyone does whatever they can to avoid getting stuck in it. But, thanks to credit cards and offers of delayed payment, controlling spending habits and preventing debt involves a considerable amount of hard work and discipline.

The first step is learning to live within our means, which is more than simply being able to pay all the bills with the money in your paycheck. Being financially secure requires having extra money every month that can be used in case of an emergency. It also involves saving money in a savings account.

Family life brings lots of unexpected expenses, so living paycheck to paycheck puts the entire family in a precarious place financially. Spending less money on a monthly basis will help prevent you from using money apportioned to the payment of bills to care for emergency situations, such as a car breaking down or children getting ill.

Spending less money every month can only be done by instituting a financial plan for the family, starting with the budget. Although creating a budget may seem to take a lot of time the first time you sit down to do it, it will become easier each time you revise it.

Budgets are useless if the people who establish them do not stick to their limits. Make sure you are held responsible by another member of the family if you go beyond the confines set by the family budget for some reason.

Try to stay in line with your budget from the very beginning of the month. Remember that habits of any kind, including financial ones, are made or broken in just two short weeks. Making a lunch at home instead of eating out during the workday will help you as well. Shop with a grocery list so you’re sure to have everything you need and prepare your food the night before work.

More than simply financial habits need to be changed in order to control spending. To prevent yourself from just going out for dinner, start thawing out frozen meat in the morning so that when you arrive in the evening it’s already ready. In order to make sure that lunches are packed and not forgotten, make them the night before instead of in the morning. Leaving notes around the house reminding you of your new goals can also be helpful.

Before purchasing any old thing that someone wants, consider if the item is really necessary and do a little hunting around the house to see whether or not you already have something similar. For example, instead of buying a new box of crayons every time your children need them for a project, save one box in a convenient location. Reusing things you already have, even with inexpensive items like crayons, will help you discipline yourself to curb excessive spending.

Don’t allow a holiday bonus or a raise at work to get you off track. Instead of adding such unexpected income to the monthly budget, simply count it as savings. Considering extra money as an opportunity to save will help you a lot.

Although it does require time and effort, spending habits can be changed when you put effort into reaching this beneficial goal.