Consumers spread their money across many different spending categories, so it is hard to keep a running tab on everything you purchase. Without a formal budget or tracking system, cash simply flows in to your personal financial system, before streaming out as bill payments and discretionary buys. And while major monthly expenses, like mortgages, student loan payments and car contracts are relatively easy to track, you might be surprised where the rest of your money goes.
Spending Categories Form a Budget Blueprint
Put under a microscope, personal budgets shed light on each spending segment. Car costs, for example, include the price paid for your car, insurance premiums, gas, repairs, maintenance, and finance charges paid toward your auto loan. Collectively, these expenses represent various items and services, but can be lumped under a single budget classification titled ‘transportation’ or ‘automotive’ spending. Accounting for car costs under a single budget section covers a wide-angle view, giving you figures to work with at a glance. In much the same way, entertainment spending falls under wide-ranging types of purchases – but leads back to a single budget category. Examples of the types of spending to include as you evaluate entertainment purchases:
Television, Cable and Internet Connectivity
Modern consumers have several options for viewing conventional TV programming. A once-free stream of channels entering homes has grown to hundreds of networks, each sold to subscribers for a price. Since most of the channels are offered to in-home buyers as packages, families typically end-up paying for unused channels. And with so many alternatives available for streaming, downloading, recording and sharing movies, music and other entertainment, it is easy for households to duplicate services, paying more than they should for redundant connections.
If you are serious about cutting discretionary spending, take a close look at cable subscriptions, Internet connections, and other forms of entertainment entering your home. Without sacrificing content, it may be possible for you to consolidate or eliminate costly subscription services.
Holiday and Travel Costs
Vacations represent hard-earned rewards for work well done. Sacrificing much-anticipated travel, even in the face of cash flow difficulties, is not a popular cost-cutting measure for cash-strapped families. When money on hand doesn’t cover the cost of a trip, consider alternative financing as an affordable sources of holiday funding. Use sites like Readies – Loan Comparison made easy to compare loan terms across various financial institutions. Personal loans, guarantor loans and even payday products are worthy alternatives, when compared to the high cost of using credit cards to pay for your vacation. The method you chose for funding travel makes a significant difference during payback, adding substantial interest charges for credit card users carrying vacation balances.
For further savings on your next vacation, consider low-budget options, like home swaps or personal residential rentals. The former involves a straight-up swap for lodging, sending you away as your counterpart comes to stay in your home. This is particularly appealing if your residence is located in a historic or tourist-rich area, enticing guests willing to swap. The later gives you access to economical lodging in homes or rooms made available by private owners.
Like leisure travel, dining out is a coveted luxury, adding to overall entertainment spending. Within reason, meals out serve a social function, at the same time as the family’s hunger mouths are fed. Overdone, however, the cost of take-out and restaurant meals quickly spirals beyond affordability. As a rule, save special dining for commemorative outings – graduations, birthdays, anniversaries and important personal milestones. That way, each experience is cherished and associated with special memories. Strictly as a matter of convenience, on the other hand, restaurant meals simply get lost in the hectic shuffle of everyday life.
Gifts and In-Home Entertaining
We are wired to present a preferred image, so it is hard to resist the urge to go over the top entertaining. With restraint, home-inspired gatherings, meals and parties can be economical alternatives for getting together. ‘Round Robins’ and potluck meals, for instance, keep costs down, without losing sight of camaraderie. As you play host or hostess, keep frugal alternatives in mind, or your urge to impress will have negative financial outcomes. Especially around the holidays, when the spirit of gift giving and lavish exuberance take over, rein-in spending or risk a ruined year-end budget.
Entertainment consistently scores near the top of discretionary spending. Depending upon what is included in the broad category, a significant share of family income is diverted to cover entertainment costs. From subscriptions to travel and personal pampering, each lifestyle choice comes with a price tag attached. As you track household cash flow and devise financial solutions, look closely at entertainment spending. By adjusting recurring commitments, like TV services and Internet connections, and dialing-back prepared meals, for example, you may find money you didn’t know you had.