Probably the biggest reason why so many US families are in debt is because we have become a nation of conspicuous consumers. If you don’t think this is true, how many flat screen TVs do you own? How many times a month do you eat out? Do you have Apple’s latest iPhone? Do you have cable or satellite television with all those cool premium channels? You just managed to convince yourself that you really do need a new car?
Needs vs. wants
The fact is, there are really only two kinds of expenses–needs and wants. While you might think you need an Apple 4S smart phone, you probably only want it. Of course, if you don’t own any cell phone and you still want that Apple phone, then I guess this might be more of a need that a want. But I think you get my point.
If you are really serious about saving money, you should be on a budget and learning how to do without. Budgeting is not much fun but the Internet has made it easier as there are several websites that offer free budgeting templates. You should get one of these templates because it will come with a long list of expenses–including some you might not have ever thought of like dry cleaning and car washes.
Once you create a budget and see how you’ve been spending your money, the time has come to decide what you can do without. This could require some painful decisions. But again, think in terms of need versus want. When you look at an item such as a 12-pack of vitamin water, you need to ask yourself whether you really need it or if you just want it. You also might think you need to buy premium dog food but does your dog really know the difference? It might enjoy the economy priced dog food just as well or, alternately; maybe you could make its food.
The more you can do without, the more money you’ll have
If you’re typical, you should be able to find at least a dozen items you’ve been spending money on that you can live without. If you’ve spent an average of $5 on these items and you stop buying them, you’ve just saved yourself $60 a month. And of course, the more of these items you can knock off–especially if they’re pricey–the more money you will save. Our experience is that the average person can save anywhere from $50-$100 a month simply by eliminating those items that are not definite “needs”.
This won’t feel good at first
This is not going to feel very good at first. Most of the “want” items in your budget will probably be fun things such as movie nights, exotic fruits, sirloin steaks and frozen entrees. And make no mistake about it. You will miss these items at first. But your brain has a wonderful way of coping with these things–it tends to gray out your memory of them after period of time. You will most likely find after several weeks that you don’t miss those “want” items half as much as you did at the beginning. Plus, you can focus on the money you saved, which you can use to either pay down your debts or simply put in the bank so you will have money to tide you over should you suffer an emergency or find yourself unemployed.