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How Is Your Budget Doing These Days?

This article was written by in Planning. 22 comments.

This is a guest article by Phil Cioppa of Arbol Financial Strategies, LLC. Phil has over 10 years of financial service experience and specializes in asset management strategies, insurance planning and taxation issues. A budget is an important part of any financial plan, and right now is the best time to take another look at yours.

Do you feel like your dollars don’t stretch as far as they used to? No, it is not your imagination. They don’t, because we are experiencing some of the most difficult economic times since the gas lines of the 1970s and the Great Depression in the late 1920s and early 1930s.

What does this mean for you? It means that it’s time to revisit your household budget to make sure that you are living within your means, that you are not wasting your hard-earned dollars on items you don’t need, and that you are setting money aside for what is really important.

What is really important? No, it’s not having the latest high tech gadget, a flashy new car, or more clothes to hang in your closet. It’s building and maintaining an adequate financial safety net for yourself so that you have the money you need to pay for setbacks and emergencies. For example, you lose your job, your employer decides not to continue paying for your health insurance, your car dies and you need to replace it, your child has an unexpected medical problem, your home needs an expensive repair, and so on. Without an adequate safety net, you may have to use credit cards to fund the unexpected, which could be devastating to your finances.

Saving for retirement is also really important. No matter how far away you are from retirement, if you don’t begin planning for it now, your inaction will come back to haunt you. No matter what –- put money aside for the future! When that future becomes “now,” you will be glad you did.

I know that doing all of this may sound like a tall order, but it’s non-negotiable. To start, re-evaluate your financial priorities, study your budget to figure out how your spending and your priorities line up, and then reduce your spending as necessary so that you can begin building a financial safety net as well as a retirement fund. And yes, doing this may require some sacrifice on your part.

If you have to spend less, examine your essential expenses, like food and other day-to-day costs of living. What can you reduce? Also look at the fat in your budget –- the stuff that you enjoy or think is nice to have, but that you really don’t need. What are you willing to give up?

Here are just a few of the kinds of questions you should ask yourself as you rework your budget:

  • Is your current cell phone plan truly the best deal for you?
  • Can you save money by bundling your phone, Internet and cable service? You’ll usually find that new account holders get the best deals so you may want to change providers.
  • Have you explored whether you could purchase your electricity or gas from a less expensive source, assuming those services are deregulated in your state?
  • Do you really need all of the TV channels you are paying for? If you changed to a cheaper package, would you miss the channels you eliminated?
  • Are you paying too much for your insurance? Ask your insurance broker to evaluate your insurance needs and explore whether you could save by consolidating all of your insurance with one company.
  • What about your vehicles? Can you get rid of one or them? And, how often do you use the motorcycle or boat you pay to insure?
  • How much are you spending each week on restaurant meals, happy hours, and coffee drinks? If you take the time to add up those expenses, you may be surprised at your final total. Take the money you are spending on such nonessentials and use it to pay off your debt faster, or to increase the amount that you save each month.
  • If you’ve been dropping thousands on vacations away, take vacations closer to home or even consider a vacation at home. Given rising airfares, you could save a bundle.
  • Refinance your home. With interest rates at all time lows, you could realize a substantial savings by getting a new mortgage loan and paying off your current one.

Nobody likes to change their lifestyle, but nobody likes to be broke either or to come up short when it’s time to retire! The key to surviving and even flourishing in a down economy is to be realistic about your spending, to decide what your financial priorities and needs really are, to give up some of your creature comforts if necessary, and to save, save, save. It’s essential if you want more money in your pocket for today and for tomorrow.

Published or updated January 19, 2012.

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About the author

Phil Cioppa is Managing Principal and Chief Investment Officer of CT-based Arbol Financial Strategies, LLC (Securities offered through LPL Financial, Member FINRA/SIPC). Phil has over 10 years of financial service experience and specializes in asset management strategies, insurance planning and taxation issues. Recently, USA Today named him one of "America’s Premier Experts" and one of the "Trendsetters of the New Economy." View all articles by .

{ 22 comments… read them below or add one }

avatar 1 Anonymous

We saved a good bit of money this year by knocking down our cell phone plan and raising the deductibles on our insurance. So far it has been a win – win for us.

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avatar 2 Anonymous

This is an excellent idea and one we should all examine!

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avatar 3 Anonymous

I get mad when things go up in price but I wonder if I would get mad if I also got raises, which haven’t happened in three years.

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avatar 4 Anonymous

Let’s hope the economy turns around and you do see a raise!!

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avatar 5 wylerassociate

i think some of the questions that phil is asking are easier said than done. For example in the phoenix area, there are only 2 utility companies that you are a customer of based on location, there are only 2 cable companies that you are a customer of based on location. My wife & I just got a family phone plan where texting & calls are free but it’s the cost of the data plan that hits you in the pocketbook. I’m doing what I can to reduce costs & stay within a budget but it is not easy.

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avatar 6 Anonymous

These are just examples as to what you are able to do. I agree all geographic areas are very different, so you should look at your own particular situation, and then figure out from there what is best to do, and where cuts can be made, if necessary. Thanks for this comment, as it show us how diverse the nation is!

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avatar 7 shellye

My husband loves movies. I mean, LOVES movies. We usually see them the first weekend they come out. I had a Stubs card at AMC that I was really big on using because we could get points for free food and more free movies (I’m a sucker for loyalty points and other marketing gimmicks) but after discovering Tinseltown’s low prices on the same first-run movies (like less than half what AMC’s ticket prices are), I’m a convert. In the past, we would spend close to $50 bucks per movie on tickets and food, but going to the other location has cut that bill by almost 2/3. The location is closer to our house and the popcorn tastes better too.

Tightening your budget doesn’t necessarily mean giving up something you enjoy doing, but rather finding a way to do the same thing at a reduced price.

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avatar 8 shellye

By saving on things like this, I’m able to put away the max in my 401k without too much of a sacrifice, and that is one of my goals for this year.

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avatar 9 Anonymous

Great choice!

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avatar 10 Anonymous

Wow! I agree – it is all in the popcorn! :)

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avatar 11 Ceecee

Living near the ocean, I love to go for rides along the coastline……but not so much when gas is over $3 a gallon. Lately there are no joy rides, just necessity rides. In the Spring, the bike is coming out of the garage.

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avatar 12 Anonymous

Not only is this a cost savings, but also great exercise! I need to follow your lead! Keep up the good work on all accounts!

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avatar 13 Anonymous

Or just getting rid of TV overall. Seems like a good move to me!

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avatar 14 Anonymous

Interesting how our culture has changed. We do seem to be so dependent upon TV. What ever happened to going to the library and reading a book? A library card is a much more cost effective way to go than even a Nook or Kindle. To say this makes one seem prehistoric unfortunately.

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avatar 15 Anonymous

This is a real problem in America. Our citizens do not sacrifice for a better future and our governmental leaders do even worse. I am old enough to know about prior generations making sacrifices for the future. There is none of this thinking going on today. And with the bad economy and lack of jobs the problem is even that much harder to solve. The only hope is for education about saving and resourcefulness and hope that it goes viral.

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avatar 16 Anonymous

I agree completely Steven with your assessment. I believe that we have primarily lost the value of savings. Everything in our culture points to spend, spend, spend, which makes budgeting and fiscal restraint close to impossible. This is true both at the federal govt. level, as well as in our households.

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avatar 17 Cejay

My budget is okay but the savings has not grown this year. Had some expenses for the house, a new air conditioner, new sum pump and then a couple of new garage doors (do not ask why those were necessary). So the savings has not grown. But the good thing is that we have money for the repairs and we are not taking from the savings account.

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avatar 18 Anonymous

This is terrific, as it is always important to try to leave the savings as is, except in the case of an emergency. It show that you are budgeting wonderfully to be able to pay those expenses without dipping into savings. Maybe 2012 will be a good year for you to put whatever you can into savings.

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avatar 19 lynn

This year was a great year for me. Lots of savings and no repairs. I stopped cable and use netflix. Phone is a pay as you go one. Clothes are sale items, etc. Lots of free items to donate and I was able to give cash to those in need..

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avatar 20 lynn

I forgot that I paid off our mortgage. This was a goal we wanted to reach as a couple. Don’t think I don’t know I am extremely blessed this year.

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avatar 21 Anonymous

Lynn, Great job! It shows that it can be done!!

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avatar 22 qixx

I have not wanted to even look at my budget for the last two months. Not sure what i was scared of. Got back to it this past week and realized there was nothing to really be scared of. Even realized that we might be able to get the car loan paid off before the end of the year.

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