Money Saving Ideas

There are two main ways to raise more money for your goals - reduce spending, or increase your income. We'll focus here on ways to reduce spending and live within your means.

Being frugal is one area where most of us have some control over our money. We may not have much control over where our investments are going, or whether we always have an income and job, but we can control spending and see the rewards of managing money wisely.

Live beneath your means-- and build more prosperity

By Karen J. Lee, CFP®

Economic times are tough and many people are struggling.
Compounding that reality is the fact that many people have a complex relationship with money. They don't even realize how they may be sabotaging their futures through current spending. There is a tendency in our culture to live beyond ones means.

We buy things we can't afford and don't need. The current economic crisis could serve to land an important lesson about the discipline of cutting back and living beneath- or at least within--our means. By following some simple guidelines, you can learn to live within your paycheck and enjoy a solid, less stressful financial future.

Here are three suggestions to help shift your mindset about money and spending.

Consider needs vs. wants
Money is a means to an end. It buys us necessities like food and shelter, and it buys us "stuff." We think that STUFF makes us happy and that other people love us and want to be around us because of our STUFF. But that's simply not right. We need to learn to detach from money and see it as a simple mathematical formula...if this is what I earn, then this is what I can spend. Think about an item before you purchase it. Ask yourself, "Do I really need this stuff?"

Mitigate your risks
"Live for today, yet plan for tomorrow" is great advice to consider when looking at expenses. For example, when it comes to life insurance, we certainly hope it won't be needed prematurely, but most people recognize how important it is to address the risks and plan accordingly.

With regard to disability insurance, think of it as "income replacement" insurance. If you depend upon your income, you should have disability insurance in place in case you become disabled and need a "replacement" paycheck to support your family.

And finally, as you start to get closer to retirement age, long-term care insurance can help to supplement your retirement cash flow to meet the additional costs of an extended long-term care event.

Make it a family affair
Money consciousness should be a family goal. Create a money-conscious household. Talk with your spouse or partner and family members. Reinforce the message that everyone needs to be careful about spending. Consider instituting a contest where everyone tries to operate within his or her budget or allowance. Suggest a "go-without day" when everyone gives up one of his or her usual items, like the mocha latte or iTunes download.

It's important for everyone in the family to understand the reasons for cutting back and the difference it can make in the family's financial situation. Big savings are important, but it's often the little things that really add up and can make a huge difference in your budget.

Other articles by Karen J. Lee:  Disability insurance saved her family

Karen J. Lee, CFP®, CLU, ChFC, MSFS, AEP
Karen is a financial planner in Atlanta, GA. Since beginning work in the financial services industry in 1987, she has worked with hundreds of families, individuals and small businesses, helping them design plans to achieve their financial dreams. Karen is author of the forthcoming book, It's Just Money- So Why Does It Cause So Many Problems. Visit her website at karenleeandassociateskarenleeandassociates.com