out how to spring clean your finances
Beth Rumsey, Staff Writer
Springtime is a good chance to clean out the clutter
that has collected in the closet during the past year. With the
current uncertain economy and job situation, not to mention the
cost of living increasing, now is also the time to spring
clean the finances and clear out any expenses that are taking
up space, as well as dollars, in the family budget.
According to Debby Black, Family Nutrition Assistant at the Ripley
County Purdue Extension in Osgood, the place to begin is to find
out where the money is going. Write down everything that is purchased,
and keep the receipts, for at least three months. Each week, break
down the spending into categories, such as food, clothing, utilities,
rent/mortgage payment, and miscellaneous.
Ideally, one would track their spending for a year,
said Black. This would help to make a more realistic budget. Its
difficult to make a budget if you dont know where the money
is going, she said.
After tracking spending, determine what purchases could be reduced
or eliminated from your spending. For example, is there a way
to reduce the cost of your daily coffee or soda? Is there a way
to reduce the utility or grocery bills? Do you really need to
spend those extra dollars every month for channels that the family
does not watch?
The grocery bill can be reduced by planning meals ahead of time;
taking advantage of sales or buying in bulk. Savings on utility
bills can be made by requesting the budget plan when
available; by opting for a lower cost phone plan or even eliminating
Knowing the difference between a want and a need
is also important, according to Black. Every family is unique
and each will have different financial priorities. The goal is
to spend your dollars more efficiently.
After looking at the spending patterns of the family, then determine
a start date for your new budget. This can be any time such as
January 1; fiscal year; or just the time you are ready.
Your budget does not need to be complicated, according to Black.
Every persons budget is different. It can be customized
to reflect the needs of the family. There are three main areas
that the budget should include: income, expenses, and everyday
The income portion will include any money coming in from jobs,
sale of items, or extra work performed with payment. Expenses
will include fixed utilities, car payment, mortgage, or insurance
as well as variable groceries, credit card, or clothing.
The everyday savings should include those payments not made on
a monthly basis such as property taxes once a year; car insurance
paid every six months; or vehicle tags. For those periodic bills,
Black advises breaking down the cost per month and saving that
amount each month.
According to Black, it is important to have at least six months
worth of income in the savings account in case of job loss or
sickness that prevents one from working. But, how does a family
living paycheck to paycheck, often with very little left over,
put away for a rainy day?
Find a level of sacrifice, said Black. She cited as
an example a daily soda at work. At a cost of about $1.25 for
a 20 ounce bottle per day, the cost would be approximately $325
a year. When the soda is purchased from the store at $5 for a
12 pack, the cost would be reduced to .49 cents per soda, or $128
per year. The difference then can be put into the savings account.
It doesnt always feel good to cut out these expenses,
said Black, but in the long run it is worth it.
Black points out that the children can help, too. Hold a family
meeting and explain that there will be some changes in spending.
Then put the children on a budget. According to Black, by giving
them a fixed amount of money a week to budget for themselves,
they are learning a huge life lesson.
Despite best efforts, circumstances will occur that will necessitate
a change to the budget. Its okay to adjust the budget
when a familys need changes, said Black.
What do you do when life throws a curve ball, such as a job loss?
Talk, said Black. Talk to your family and the people
living in your home. Talk to your creditors and find out what
options are available to help you keep the bill paying commitment.
Cut out spending on everything but the essentials,
advised Black. Also, look into community resources that can help
you. For example, contact your township trustee to learn where
to get help with groceries, rent, or utilities.
And make use of the time off by completing projects that you have
not been able to finish; learn a new skill to make yourself more
marketable in the workforce; or just take time for yourself and
relax for a while.
For more information on the Family Nutrition Program, which includes
classes on budgeting, healthy eating, and stretching your food
dollars, contact the Ripley County Purdue Extension at 812-689-6511.