How to reduce your spending and still have fun.

Money-Saving Matters for limited budgets

An accountant once asked me "Outside of your household expenses, how can you afford to live on only £1000 (c $2000) a year?"

Somehow I do. ....And very nicely too for much of that time. So as not to mislead you, I do have a modest buffer, built up over years of saving. But that said, I still enjoy my life on a meagre amount of money. And my savings 'for a rainy day' are still intact!

I am writing this while eating a tasty 'end' crust of wholemeal loaf for breakfast and drinking freshly-squeezed orange juice (from some past-their-best oranges). Tonight I am planning salmon steaks for dinner. I picked them up, vastly reduced, use-immediately, in the supermarket, but it was home-freezable and kept in the freezer until I ready to make a meal of it! I will be opening an 'on offer' bottle of wine.

So how can I advise you on practical ways to live well and avoid debt? I will outline some of my philosophies and strategies and you will see more practical tips towards the bottom of the page.

Live within your means

This phrase is often heard but what does it actually mean?

Let me give you an example from Mr Micawber, after serving time in a debtors' prison: - 'Annual income twenty pounds, annual expenditure nineteen and six; result happiness. Annual income twenty pounds, annual expenditure twenty pounds, ought and six; result misery.' ...So stated the fictional character, Wilkins Micawber in Charles Dickens' 'David Copperfield'.

Be aware of how you spend your money and do not spend more than you earn. If you have a twenty thousand dollars a year and spend twenty thousand, one hundred you will be in debt. Even if you have a million dollars and spend a million and one, you will likewise be in debt.

To master how not to overspend, use the acclaimed 80/20 rule; - believe that you only have 80% of what you actually have and use that. Spend accordingly (but not extravagantly) within that 80% and disregard the other 20% so it can be set aside as savings.

If always amazes me when I see jobless, cigarette-smoking (at £5+ per packet) and tatoo-ed, pierced, gel-nailed characters, with salon-coloured and styled hair, bemoaning the fact that the government hasn't given them enough to feed their children and they've over-spent their weekly allowance. Hello! What have they spent that money on? (And it is usually not contraception either!)

If you have £200 a week coming in then try to only spend £160. Set aside the rest for your savings plan. 

Pull in your belt but allow for treats

Don't deny yourself what you realy, really want. Mmm. Is that possible when you hardly have any money? I am talking about making it an isolated one-off special occasion or treat rather than a habit. Use a little of your savings towrds a vacation - say 5% of your (20%) savings. So if you get £15000 a year then your holiday fund would be £750.

One evening you may really fancy a meal out. Okay you are fed-up and need cheering up. So, choose a place with reasonable prices. For the rest of the following week you need to try and 'recoup' that expenditure by eating more affordable fare....mince (US - ground beef) rather than steak, sardines rather than tuna.

There is no need to cut back on having a healthy diet. This can be achieved easlly within your budget, if you don't 'waste' money on snacks and sweets. Be flexible and encourage your children to eat different brands rather than demanding the expensive brand they have seen in advertisements.

You cannot pass up that pair of shoes....'and they are reduced...' (well done). Okay you can have them if you make a pact not to look for any more shoes for at least 2 months.

Then consider what Will Smith says 'too many people spend money they haven't earned to buy things they don't want to impress people they don't like'.

If you are treating yourself consider carefully the wisdom of the purchase and remember; - pay cash, don't be rash.

Be a ‘money manager’

I live by the old maxim 'never a lender or a borrower be'. But a saver - yes, most definitely! Even if it is 50p/a dollar a week. That equates to £26/$52 a year; -  money to have in hand.

The necessity to save is two-fold: First you need long-term security for retirement and to supplement any pension entitlement. Secondly you need an emergency fund for when your refridgerator finally packs up, or you need a new set of tyres on your car. What you save today could get you out of a sticky situation down the line.

The money managing tip that I am sure you have heard before is to curb your spending on credit. If you do have to use a credit card pay it off in full each month. The sheer amount of interest that is charged by credit card companies eats chunks of your hard earned money. You can keep an eye on your expenditure much more easily of you don't use a credit card. With most store card, the same applies, the interest you pay is wildly over the top.

I keep my outgoings accounted for by spending cash where possible. I check in my purse to see whether I can afford a certain item that particular week. If I have over-spent in one area, like a new T-shirt,(did I really need that T-shirt?) I will ration my wine-drinking for the week.  I will have to otherwise the cash will run out!

Be aware of how much ready cash you have....and how much you have coming in. Consolidate your expenses; how much is your total household income and how much are your necessary outgoings for rent, services and amenities? What is left over?

Never rely on that money coming in the following month. So don't over-spend. Just use what you have in the here and now. You cannot assume that you can pay it back later. Circumstances may conspire to prevent this. An extreme example is that you may lose your job.

Two things I do I stash my cash in secret account and try to forget about it. And I work a couple of mmonths ahead to forecast that I will have enough to pay my living costs two months down the line....If this looks unlikely, then it is time for a car-boot sale (garage sale if you are in US!)

Returning to the 80/20 principle; if you can afford to spend £10 for an item, spend £8 instead. A saving of £2! If you need a new handbag and have set aside $50 then find one for $40 instead!

Look for cheaper versions of luxury

Charity (thrift) shops carry all sorts of wonderful goods. Be diserning and you can get some great bargains and know that your money is helping a good cause alwell., Car-boot, swap-meets, garage sales, e-bay...,

Instead of heading for the local spa, organise a home-pamper session with friends. Light a few candles, put on soft music and have a few nibbles and drinks ready. An individual basin of hot water serves as a fab foot soak, (refresh and take it in turns) and use up that exfoliating scrub you got for your birthday, and smelly lotions, fluffy towels, nail buffers and polish, Friends can bring along any massage props they have,

Have friends round to dinner rather than go out. The meal doesn't have to be expensive (and if they bring wine you often finish the evening a couple of bottles up!)

Cheap food is not always bad. Basic supermarkets own brand have to be of a certain good a standard to show case their quality. It is not the case that the cheapest are necessarily the inferior products.

I have varied what I spend on make-up, creams and lotions over the years and come to the conclusion that some of the cheap brands, yes cheap, really cheap can be just as effective as the expensive 'named' brands. Make-up if applied well, with good technique, can look a million dollars.

Gok Won, a UK-based TV style guru, takes on the fashion houses against high-street brands and can produce outfits just as stunning and chic as designer brands. Great job Gok! Take a leaf out of his book and buy cheap and accessorise to look unique.

Look after what you have

Take care of things and respect things around the house. Carpets last longer if you ask the family to take their shoes off when they come in,

Mend things when they are broken. Unless they are threadbare, dilapadated or burnt-out then they can probably be mended.  A stitch in time saves nine, - if clothing is slightly torn, mend it before it gets worse..

Polish shoes and waterproof them and dab out scuffs to make them look like new.

Keep a clean and well-presented house. Keep the oven cleaned and don't let dirt and grease build up to the extent where something has to be thrown out for lack of cleaning.

Recycle and re-use

There is a world moving back towards this mentality of re-using and recycling. My father used to embarrass me as a kid, throwing nothing away and trying to find another use for it. But now I see how right he was.

Only a generation or so ago people had to save up for even the basic 'white goods'. Or they would happily purchase second-hand goods and 'make do'. There seems to be a stigma these days, of accepting 'used goods. People want to appear affluent and able to show-off to friends and neighbours. They want the latest gadgets and the newest models. Buying second-hand is a perfect solution if you can't afford new. Look in your local paper - sometimed items are even free if you are willing to collect.

If you are creative and think laterally there is more than one use for just about anything when its original use has ended. If you have children in the family then ask them for ideas. 'Who can think of the best way to reuse this?'

Don't let things go to waste. Think twice before putting anything in the trash. eg Make gift tags from old greetings cards. ...and reuse wrapping paper (iron it if it is crumpled)

Have a car-boot sale/ garage sale yourself. Organising it is not only is it a great way to spend quality time with your family but also brngs in some extra cash. One man's trash is another man's treasure. Even broken stuff can sell. Artists can come up with a creative ways to turn written off junk into something beautiful. 

Tips for trimming your expenditure.

If you are spending because you are unhappy (retail therapy), be aware that money cannot buy happiness. In fact by spending you will exacerbate any financial problems and end up further in the doldrums.

Avoid impulse spending. Often you don't actually need an item and would not miss it by next week.

One of the biggest annual savings for families can be made on groceries. There is a huge amount of waste from over-buying at the super market. Buy what you need and use it all. Don't wait until it goes off and you have to throw it away....you could cook it and freeze it,

Teach your children to accept the meal you cook for them and not be demanding.

Check which vegetables are cheapest? Carrots and cabbage goes a long way. So why buy the asparagus cauliflower every week? Be flexible and buy what ever is on offer at the time.

Buy standard cheap olives and add your own flavourings (like garlic cloves) to the jar to infuse.

Slice a chocolate bar and share it with family. I paid 20p (about 35c) for a mini Milky Way and sliced it into 16 slithers.....Served as an after-dinner treat it was just as satisfying as an expensively packaged box of truffles.

Wait until you get home and have a coffee. If you have a habit of popping to your local coffee shop every day for a coffee, this could be costing you about £700 ($1,000) a year.

You would be amazed how much extra toothpaste comes out of a 'finished' tube if you cut it in half. Likewise add water to finished shampoo bottles and you may get another wash from them.

Err on side of the short-measure, when pouring a glass of wine. You will get 7glasses instead of 6. Or with cake, a smaller portion from a circular cake may mean it lasts a couple of extra days. And you don't really notice the 'meaner' portion.

Regularly check that you are on the best deals for insurance and gas and electricity tariffs. Likewise with phone and broadband deals. These are constantly changing and but for a phone call you could be over-paying considerably.

There are so many tips that I could share but please feel at liberty to share your money saving tip below. It will cost you nothing to help others!

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