How to Live on a Small Budget

Americans spend 10% more a month than what is made.  The average credit card balance is more than $8,500.  Look at your credit card statements for the past 4 months and ask yourself, “Did I really need that item? Could I have found it cheaper elsehwere?”

No matter what the current state of the economy, no matter what the current trends, no matter what the unemployment rate is or where interest rates lurk, you should consider some money-saving ideas in your household.   

Living on a tighter budget simply requires you to add a bit of creativity to your daily expenses.  There are plenty of ways to live on a small budget without feeling like you are pinchy every penny.

Start with your credit cards.  Lock them up!  If you want (desire versus need) to buy something but you cannot afford to pay cash for it you probably do not need it.

Entertainment is the first expense that seems to be talked about when it comes to living on a budget. We like to do things in our free time and we like to go out to eat or to concerts on the weekends. But when money is tight, we need to be a bit more creative in how we entertain ourselves.

• Look at your city’s newspaper or entertainment guide regularly to see what free events are in town. You will be surprised at how many free things there are to do when you take the time to look for them.
• Have a movie night at home. Instead of spending money on going to the movies, why not take out some of your favorite movies that you own and watch them at home? You can pop some popcorn and have all night movies marathons.

Grocery costs are another major expense for many families. Fortunately, there are also a number of ways to save on food and groceries.

• First, you should always pack your lunch for work. Not only will you save a ton of money, but it’s also a lot healthier.
• Skip the Starbucks. Many people don’t realize how their coffee expenses can add up. A single latte can cost up to $4.  This means that a Starbucks addict ends up spending about $1,000 just in coffee. Start making your coffee at home and your wallet will thank you for it.
• Buy in bulk. There are a number of stores that allow you to save by buying in bulk.  Sam’s Club and Costco are most well-known examples.
• Look for coupons. Coupons can save you a ton of money. However, you have to be careful. Even with coupons, you might not be getting the best buy. Comparison shopping is key.
• Look for generic products. Often times, the only difference is the packaging.

Gifts and holidays are another source of worry for those living on a tight budget, but they don’t have to be. Though it may seem like you need money in order to show someone you love them at the holidays or on their birthday, this isn’t the case.

• Create freebie coupons. Mark some index cards with free help or favors that you will provide whenever they need it, whether it’s a backrub or mowing their lawn, your time and your help is more valuable than anything that comes with a bow.
• Look at online auction sites or garage sales for gifts. While it can be tricky to find nice gifts that are cheap, these two places are often a lot more helpful than you might think.  Sometimes you can find some good deals on forums.

If you know of any other frugal tips, please feel free to add them in the comments. Your ideas will help other readers.