“I really want to start saving, but I am not even making enough to meet my basic expenses. I work and go to school most evenings, so I don’t have time to try and earn another income.

“I’m tired of living hand-to-mouth and worrying that I have no savings. Can you give me some ideas to find extra money to save?”

The difficulty in finding enough money to save can be explained in two simple equations:
Expenses > (greater than) Income, or Income < (less than) Expenses.

You’re either living beyond what your income can provide, or you’re not earning enough money to finance your lifestyle. Similarly, there are really only two ways to solve the problem: spend less, or earn more.

This week we’ll look at the first option. You have stated that time is not on your side, so trying to earn more might be difficult right now. Therefore, you have no choice but to curtail your expenses and be smarter with how you spend your money.

The first step is to examine carefully your current spending habits. No matter what your financial goal is, it’s important to establish a budget that will detail your income and expenditure clearly on paper.

Many people feel hopeless and powerless about their finances, simply because they don’t have a clue where their money goes. The purpose of a budget is to give you control over your spending.

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Take some time to really think about all the things you spend your money on. It doesn’t matter if it’s only J$100. If you unnecessarily spend J$100 a day, that adds to J$3,000 per month that could have gone into your savings account.

If you’re not sure what you really spend on some things like clothing, estimate an amount that is reasonable based on your income. Look at your spending patterns through the course of a year, so that you don’t miss those costs that don’t occur every month.

Now that you’ve written down in detail all your expenses, let’s look at some of the categories and see how you can reduce spending.

Groceries:

– Never shop without a list. Going to the supermarket without knowing what you want will lead to impulse buying.
– Team up with friends and family to buy in bulk for the wholesale prices. This puts less pressure on you to find all that money up front.
– Check other supermarkets for prices of items that you buy regularly, to see if you’re getting the best deal. Look in the newspapers for items on sale at different supermarkets.

Utilities:

– Spend a little extra to buy fluorescent bulbs. They use about two-thirds less energy and last longer than regular bulbs.
– An old fridge might be costing you more in electricity. It might be worthwhile to get a new energy-efficient model.
– Change your old shower head to a low-flow fixture, which gives a good spray but uses less water.
– Displace water in your toilet tank with a few jars of water. You don’t really need a full tank to get a good flush.

Food:

– Make enough dinner to carry leftovers for lunch. Make your own fruit drinks or drink water with your meals.
– If you have a garden or even a few flower pots, plant vegetables like scallion and tomatoes. You’ll save a lot especially when these items are scarce.

Telephone:

– Depending on your calling habits, it may be cheaper to get a pre-paid phone and buy credit as you need it. If you have to make a lot of business calls, it could be less expensive to go on a post-paid plan. Call your telephone company to find out the best plan for your needs.
– If you have to make a lot of overseas calls, use low-rate calling cards or check around for unlimited flat-rate calling plans.

Personal Care:

– Go to the hairdresser every other week instead of once per week.
– Buy a hairdryer for at-home hair care, or get a shear and learn how to trim your children’s hair.

Loans:

– Try to refinance high-interest debt. Taking out a credit union loan to pay off a credit card can save you a lot in interest costs monthly.
– If you must use credit cards, look for options that give you a reward, like travel miles or money back for amount spent.

These are only a few suggestions on how to reduce your expenses. If you’re determined enough you will be able to find many other ways to slash costs and channel this extra money into your investment account.

Copyright © 2006 Cherryl Hanson Simpson. No reproduction without written consent.

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Originally published in The Daily Observer,  April 6, 2006

Cherryl is a financial columnist, consultant and coach. See more of her work at www.financiallyfreenetwork.com and www.financiallysmartonline.com. Contact Cherryl