10 Survival Tips for Today's Financial Atmosphere

We have read the headlines about our economy. We know we need to live within our means, but the truth of the matter is many of us have never lived by a budget.

Written Sep 25, 2008, read 46 times since then.

The Numbers Don't Lie! The first thing we need to do is get our ratios in line. I am going to break this down as if we were talking about a household budget. Once you have the general idea you can tweak it to fit your business as well:

#1 Put 10% of your income into savings - Do this without fail. If you don't trust yourself with it, put it into an interest bearing savings account or staggered CD. Put it there and forget about it. Trust me, you will not miss it! In the beginning you may need to start with 5% for retirement and 5% emergency fund. When we are backed in a corner financially we tend to make costly decisions like putting it on a credit card or getting a payday loan.<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /> #2 Allow 30% for housing - The average American is closer to 50%. If you are in that situation, you will need to work extra to get that where it should be. #3 Allow 20% for transportation - Include gas and insurance. It amazes me the cars people are driving these days. If you bring home $4,000 per month you can not afford a $450.00/month car payment. #4 Allow 15% for utilities - Include phone, gas, electricity, water, sewer and garbage. Did you notice cable and internet are not on there? I know some of us need the internet for work etc. but for your budget's sake, it falls under entertainment. There are obvious things like shut off the lights and turn the heat down. Get rid of the kid’s cell phones. The school still takes messages during the day and lets the kids use the phone to call you in case of emergency or schedule changes? I guarantee you they will become more responsible and learn to plan better without the cell phone. I made that move 2 years ago and we have all survived just fine! Time your showers and if it's not dirty don't wash it. #5 Spend 10% of your income on food - Include eating out. If you have a busy schedule you can save hundreds of dollars a month with a little planning. If you live in your car, invest in a small cooler and start bringing your lunch/dinner. Not only is it better for you, but your wallet will be glad you did! I have a family of 4 and we instituted Thursday night soup night. It saves me money and time, get creative! If you really need to cut back, maybe add <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" /><st1:place>Sandwich</st1:place> night too. Every night does not need to be a full course meal in order to be balanced and healthy. #6 Allow 10% of your income for entertainment - That might sound like a lot but remember we are including your internet and cable with this. If you need to tighten up anywhere, this is the first place to look. A health club membership goes here too. #7 Put 5% of your income into a "Slush Fund" - This fund is for little incidentals such as clothing, hair cuts, beauty items, co-pays, prescriptions, you fill in the blank. This is all rule of thumb, and might need some tweaking at first to compensate for past spending flaws. Let’s change gears and add some ideas to get that budget on the right track. Remember your two main goals should be to save money and pay off debt. #8 Trim housing costs - You may need to do some planning here. Call your Mortgage professional and see if they can get your payment down. They may able to get your rate down or refer you to people that can help you in other ways. You may need to get with a Real estate agent and see if selling your home is the right option. It may require doing a short sale in order to get it to sell. Taking care of this now is the key to saving your credit score and keeping yourself out of foreclosure. Neither of these professionals will charge on an hourly basis, and will be happy to help you get the information you need to make an educated decision. If you are leasing start looking into other options before your lease expires, planning is everything. #9 Trim transportation Costs - If you like your car and it is practical refinance it. The best place to start is with your personal banker. They will be looking to finance 20% less than the value of your vehicle. Sometimes a line of credit will do the trick. If that is still not doable, find a trustworthy car sales person and down grade. (If you need one I can give you the number of a good one) Work from home when you can. With technology today many of us have that ability but do not take advantage of it. Run your errands in groups. Get with other parents and see if you can take turns picking up the kids from practice. That will also save you some time. Stop letting the kids drive to school, the bus is free! #10 Trim insurance costs - This should be done carefully. You do not want to leave yourself vulnerable, however make sure you are not over insured either. Taking the time to talk to three agents from different insurance carriers can be of benefit. Find out if they have a discount for multiple cars or bundling with your homeowner or renter insurance. Before you make your decision make sure you are comparing apples to apples.

The condition of our economy started with “beat the Jones”. Teaching ourselves and our families to live according to our means will help us now and in the future!

Learn more about the author, Lisa Kee.