Americus Times-Recorder, Americus, Georgia

Local Columnists

January 22, 2013

Mtizi Bacon: Plugging budget leaks

AMERICUS — Do you have leaks in your household budget? For most people, the answer is yes. Plugging the leaks can keep as much as twenty percent of your hard-earned money from going down the drain. Fixing budget leaks is a fun, do-it-yourself project for the entire family.

Knowing how much money goes into the budget is the first step to figuring out the size of your leak. You will never know how much money goes down the drain until you do. Start with your gross pay, the amount before taxes and other deductions come out.

Taxes and deductions are a potential source of leaks. Including deductions is especially important when your employer lets you choose from a menu of benefits. Make sure you understand your options. Matched retirement-savings programs, tax-deferred withholding options, voluntary automatic saving tools, and other benefits are too valuable to overlook.

Look at every expense as a potential source of leaks. Maybe you pay for more cable stations, cell phone minutes, wireless apps and other services than you use. Or maybe the same or etter quality of service is available from another provider for a lower price.

Day-to-day spending habits are the real gushers. The less you spend, the less likely you are to think about the cost. But little things you do every day can add up.

Consider the following example.  Mr. Spendy goes through the drive-through for a cup of coffee and a bacon and egg biscuit on the way to work. Midway through the morning he runs across the street to the coffee shop for a cup of his favorite blend. Later Mr. Spendy meets up with friends for lunch at a local restaurant chain. On the way home from work, he stops by a convenience store to purchase a soft drink for the drive home and picks up a magazine at the counter that catches his eye.

With the exception of lunch, Mr. Spendy never spends more than a few dollars. But the total for

the day is at least $20. That amounts to more than $100 a week for a grand total of over $5,000 per year. Cut it in half and Mr. Spendy saves $2,500 for the year.

Michael Rupured, Consumer Economics Specialist, advises that tracking your spending is the key to identifying potential “issues” and is worth the effort. Once you know where your money goes you can see the leaks more clearly. Finding them is the hard part. After you do, what you need to do to plug them is obvious.

Start with any records you may have. Monthly statements, checkbook registers, receipts and other records show where your money goes. Carry a small pad with you and record your daily spending habits. Write down every cent you spend, what was purchased, and the reason.

Identify expenses you feel are too high. Once you identify areas where change is needed, develop a plan to reduce these expenses to more acceptable levels. Your first reaction might well be to give something up. Sacrifice can help you get results fast, but a more moderate approach is usually more successful. Instead of giving up the soft drink and candy bar you buy at work every day, purchase them at the store in bulk and take them to work with you.

Maintaining a leak-free budget is a never-ending job. With practice, you learn to spot trouble at the first drip instead of when the pipes burst and you have a mess to clean up. I have some excellent worksheets and tools here at the Extension office that might help you with tracking your spending and budgeting. Just give me a call.



Mitzi Bacon is Sumter County Extension agent, Family and Consumer Sciences, University of Georgia Cooperative Extension Service. Contact her at 924-4476.

 

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