The media often talks about the economy, and they usually say it will probably get worse before it gets better.
“Families are getting hit hard on the basics like gas and food,” says Debbie Brown, vice president of investments with Raymond James & Associates.
“Studies indicated that close to 43% of American families spend more than they earn each year. People have been so focused on buying what they want regardless of the terms. Now, they are forced to rethink how they spend money.”
An analysis of Federal Reserve statistics in early 2015 revealed that the average U.S. household owes $7,281 on credit cards. Average indebted households carry $15, 609 in credit card debt.
“When people make decisions about spending they often operate out of emotion instead of thinking through the decision,” Brown says. “I know people who purchase items based on what their next paycheck will be versus what they have in the bank. In this economy nothing is certain. I encourage families to take a hard look at their spending, to set priorities and a budget and to live within their means. With energy and food costs going up, this can truly be challenging.”
Brown says these ideas can help families stretch their dollars as far as possible:
Establish a family budget. Use this as an opportunity to teach your children about the cost of living. Involve them in the process so they understand what it costs for electricity, water, cable, eating out, clothing, insurance, etc. Ask them to contribute ideas for ways family members can help conserve like turning off lights when leaving a room, carpooling or riding the bus.
- Take your lunch. Instead of buying lunch at school and work, take your lunch. The Browns figured they could save at least $50 a week ($2,600 a year) by not eating out.
- Be intentional about running errands. Think about where you need to go and whether or not you will be in the area for some other reason during the week.
- Examine your cable options. You may be able to significantly reduce your fee by agreeing to fewer channels.
- Buy your specialty coffee at the grocery store. Instead of spending $3.50 on a daily cup of coffee, get specialty coffee from the grocery store and brew it yourself for about 17 cents per cup.
- Go through the drive through to cash a check. Paying ATM transaction fees can add up to some serious cash.
- Don’t buy on impulse. Many times we see things we think we need, but the truth is we can live without it.
“So many people think of budgeting as a negative,” Brown says. “I think this is a great opportunity for parents to challenge their kids to see how far they can help make the family income go each month. Most young people have no idea how much it costs to fill up the gas tank or buy groceries, much less heat or cool a home.”