Managing Finances During Tough Times: Practical Tips for Families
Immediate Action on Financial Reversal
Many families wait as long as six months to adjust their lifestyles after a reduction in income, making matters worse as they hope for things to get better. In doing so, they waste valuable time as well as money according to consumer and family economics educators.
They advise families to act immediately to stop all excess spending when they experience financial reversal.
They advise families to act immediately to stop all excess spending when they experience financial reversal.
“Buy only what you and your family really need,”they say.
Prioritizing Fixed and Flexible Expenses
When money is tight, people should give priority to paying fixed expenses, such as rent or mortgage payments, insurance premiums, car payments and credit card debt. They need to keep a roof over their head, a vehicle to drive, risks covered, and their credit in good standing. It’s better to cut back on flexible expenses – food, utilities, clothing and household expenses – as much as possible.
Questions to Evaluate Flexible Expenses
Ask yourself the following questions about your flexible expenses:
1. Can we substitute this item/service for a less costly one?
2. How can we conserve resources and avoid waste?
3. Are there opportunities to cooperate with others by trading or sharing resources?
4. Can we save if we do it ourselves?
5. Can we do without it?
1. Can we substitute this item/service for a less costly one?
2. How can we conserve resources and avoid waste?
3. Are there opportunities to cooperate with others by trading or sharing resources?
4. Can we save if we do it ourselves?
5. Can we do without it?
Saving on Food Expenses
To save on food expenses, shop with a list of planned items and look at food advertisements for good deals. Make as few trips to the supermarket as possible; don’t go when you’re hungry; give yourself plenty of time to make selections; and leave the kids at home if you can. It’s hard to say no to your children’s favourite foods when they go along. Lastly, there are also low-cost protein foods such as dry beans, eggs, peanut butter and chicken, amongst others to help save your wallet.
Saving on Utilities and Household Maintenance
To save on utilities and household maintenance, turn the thermostat down 5 degrees and wear warmer clothing, find and fix air leaks and insulate where you can, close doors to unused rooms and shut off heat to those areas. Take shorter showers.
Reducing Transportation and Medical Costs
Carefully plan the use of your car to reduce the amount of driving you do and minimise medical aid claims by staying healthy through exercise.
Cost-Effective Recreation
For recreation, consider activities that are free or inexpensive. Hiking, picnicking, and free concerts or museums, or entertaining at home are great ways to socialise without having to break the bank.
Alternative Gifting and Services
Make gifts instead of buying them and donate services or time instead of money. Offer to babysit, take care of an elderly person, house watch, pet sit, or mow the lawn.
Eliminating Costly Habits and Setting Allowances
Also, think about eliminating costly habits such as smoking and drinking alcoholic beverages, and set a reasonable amount for children’s allowances, making sure there’s a definite understanding about what they cover.
Adapted from:
http://www.ToughTimes.illinois.edu
Adapted from:
http://www.ToughTimes.illinois.edu
Summary
How to Adjust Your Lifestyle After a Loss of Income
Many families wait too long — sometimes up to six months — to adjust their spending after a financial setback. But delaying change can make matters worse. As soon as income drops, cut all unnecessary spending. Focus on the essentials and be proactive.
Prioritise Fixed Expenses
Keep paying for the things that protect your stability:
These are critical to keeping a roof over your head, staying mobile, protecting your assets, and maintaining good credit.
Re-evaluate Flexible Expenses
Ask these 5 questions before spending:
Save Money on Food
Cut Back on Utilities
Rethink Transport & Healthcare
Affordable Recreation
Try free or low-cost activities: