Time Magazine recently reported that half of all American households spend more than they make.‡ In fact, the median household income surpasses the median cost of running a household each month by $668, according to Interest.com. But that amount can be slashed. The $668 is available for savings but is spent on goods and services that are beyond what is necessary to support a home.
"The results suggest that many households are allowing expenses to grow, whether by moving to a bigger house or buying a more luxurious car, until their bills consume every dollar of disposable income," Mike Sante, Interest.com managing editor, told Time. "That's actually encouraging. It means they aren't caught in an unwinnable rat race, the powerless victims of economic forces beyond their control."
Here are a few tips to consider to boost your financial situation
Start keeping a budget
According to Sabah Karimi of U.S. News & World Report, keeping a budget can help you take on habits that will make you more mindful in regards to spending choices and a shopping routine.
She said a shopping list can help you prioritize items that are necessities while eliminating items that aren't vital for your day-to-day living. She also said maintaining a daily log of everything you buy can make it easier to track your spending habits. This helps you see if you are spending too much on certain items, allowing you to order or classify purchases you deem most necessary. Karimi said that most people who shop with a list and use cash to make purchases tend to do a better job with their budget.
"Shopping with cash can make it easier to manage your budget and be more mindful about how much you spend," she said, adding that you're likely to be more aware of what you are spending.
Save money on travel plans
Creating a budget doesn't mean that you have to forego all the fun. You can still go out to eat with your family, hit the town with your friends or go on a vacation. The key to doing all of this, however, is staying within your means to avoid debt.
If you decide to go on a vacation, finding cheap airfare can be difficult. The Associated Press reported that airfare rises and falls quickly, meaning you'll have to jump on a good deal when you see one. According to CheapAir.com, the best time to buy a domestic flight is 54 days before purchase. Yet that can change if you are choosing a popular destination or making a journey during a busy traveling season.
Airfares to popular destinations and around holidays tend to rise rapidly. CheapAir.com reported it's generally a good idea to buy a flight for the holidays five to six months in advance.
Saving money as a recent graduate
Trying to save money can be difficult for the most savvy planners, but it's borderline impossible for recent graduates leaving school with hefty student loans.
Gerri Detweiler of Credit.com said that most college graduates "may think it wise to do everything you can to pay off your student debt as fast as possible," but paying down debt faster isn't always the best move.
Detweiler said if you are able to keep up with your payments in a timely fashion, student loans often give your credit score a boost. She added that recent graduates should instead focus on keeping up with payments and starting an emergency fund.
"You'll be able to make the minimum payments on your debts and maintain a good credit rating no matter what life throws your way," she said.Author: Marc Vasquez