5 On Your Side

Budget-cutting can add up to big savings

Posted November 17, 2008
Updated November 21, 2008

In these tough economic times, does your money fly out as fast it comes in? Experts say finding ways to save might require changing the way you think.

To start tightening your budget, you have to understand the difference between necessities and luxuries, Rebekah O'Connell, a credit counselor with Triangle Family Services, said.

"Rethink what you're doing," O'Connell said.

For example, electricity is a necessity; cable or satellite television is a luxury.

"You could shut it off completely and be OK and get up and go to work tomorrow," O'Connell said.

Or switch to basic cable. That service costs about $12 a month – easily saving some people $50 to more than $100 a month.

Phone service is a necessity, but unnecessary features – text-messaging, three-way calling, call-forwarding, voicemail and call-waiting – are luxuries.

A basic landline service often costs less than $20 per month, or you could cancel your landline if you have a cell phone. Limit expenses with your cell phone as well; a prepaid phone can cost just $20 for three months of use.

"You can have a much less expensive phone if you're willing to make the change and not live on your cell phone, not text your friends every day all day," O'Connell said.

Cars can be a necessity, but a new or fancy car counts as a luxury.

"Cars are tools. Get the ego out of it. They're supposed to get you from one place to another," O'Connell said. "Keep it maintained. Keep it going. Keep it running as long as possible."

Clothes are a necessity, but excessive shopping isn't.

Go shopping in your closet first. Look for things you forgot you had and, more importantly, assess what you really need. Then shop only for those items.

"Don't drift over into the summer sales, looking at leftover bathing suits," O'Connell said. "That's not why you're there."

Personal care is a necessity, but getting your hair done and fake nails every week is a luxury.

"When we start counting, they'll spending $200 and $300 a month on personal care," O'Connell said. "Try doing without. I've probably convinced a number of people over time to give up the fake nails."

People often end up spending more than they know on food and eating out.

The average cost of eating lunch out is $6.50 a day, $33 a week, more than $130 a month. Those fancy coffees and trips to the vending machine can add up to more than $50 a month.

By cooking dinner at home, the average American could save more than $200 a month.

The point is to look for things that we spend money on but can really live without, O'Connell said. To help figure out where you spend your money, use this monthly expense tracker.

"It just requires thinking about it differently," O'Connell said.

Learn from an energy expert how to save money in every room of your house on WRAL News at 6 p.m. tomorrow.

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  • OpenM1nd Nov 18, 2008

    Also be sure to try using a computer program such as Microsoft Money or Quicken to help track and manage your expenses if you are not already. They'll show you how much you are really spending in various areas of necessity and luxury, as indicated by this article, and can assist in paying bills on-line, which helps to avoid late charges and fees.

    It's also quite alarming to hear about the number of people who do not know how -- or are not willing -- to budget and stick to it.

    Another way to save money is to try to pay off debt. Finance charges don't buy you anything except problems. One tool for helping to manage credit card spending is by using a checkbook register. It works by helping to keep charged spending within budget and to help prevent surprises on monthly bills. Another helpful tool is to get into the practice of saving first, and spending later, thus reducing the use of the plastic money.

    Good luck to all, and thanks, WRAL, for posting such a helpful article!