In the reality of today’s economic climate, getting along without a budget is sure to lead to insolvency. No one can afford the luxury of spending without thought as to where money goes. Those morning coffees and newspapers are becoming a thing of the past as many families tighten their budgets.
With easy access to credit, the average family has fallen into a debt trap from which they find it difficult to climb out of. Many families have simply forgotten the basics of using money, principally the adage that you can’t spend more than what you make. The first step for us then was to get back to the fundamentals of budgeting. That means putting up a family budget.
For us, the first step to financial health was to change the mindset from spending to a focus on saving as much as possible. In good times, savings always gets put off. But the recent economic situation forced us to evaluate our thinking habits. Rather than focus on spending, we focus on how we can use money to create more wealth.
Next to the change in our mindset came the education to use money wisely. Many of the rags to riches stories everyone reads about come from men and women who sacrificed and saved until they could buy what they could afford. Patience was an important key to their success. Like many others we fell into the trap of easy credit. We became too used to plastic money, without much care that interest rates could double that initial purchase when left unpaid. We’ve learned since to employ some self-discipline which we found vital for survival.
Advertising is a powerful force that drives many into spending recklessly. So many have been brainwashed into believing that they must live up to some standard of wealth they see projected on television and the newspapers. We learned that what the media claims as financial success does nothing more than line the pockets of the already wealthy. Consumerism works well to a point as it creates jobs and increases profits, but the bottom line still rests with how you and me handle our finances
One of the critical elements we discovered lies in the correlation between money and time. Those who become wealthy know how to use time to grow their money. They don’t just plan for tomorrow, they plan for next year and the year after. It takes a good deal of patience to leave savings and investments undisturbed. We’ve learned to go back to the old tried and true ways of our grandparents as they scrimped to eventually buy a home without a mortgage.
These methods are not new. They simply need to be relearned and applied. If you’re realistic and truthful about your current state of finances, you’ll know exactly where you can cut back. We discovered we can save far more by cutting back on morning coffees, donuts and newspaper. We discovered that we don’t need to stock the bar with cases of beer and liquor. While we don’t smoke, a regular pack of cigarettes can significantly impact any family budget. We rediscovered the 10% rule. Save 10% of every dollar you make and keep it where it can’t be easily accessed.
In our part of the country, we found that time-of-use can save a good deal on the electric bill. Similarly, reducing the temperature while sleeping or when absent from home makes a dramatic shift in heating costs.
We keep searching for more effective ways to live with less but still live comfortably. In today’s economic climate, that’s a necessary endeavor for every family as no one can be sure what tomorrow will bring.