I just got off the phone with an old friend. We were talking about how now just might be the best time to really take a hard look at our monthly budgets, to look at what we are spending and where the money is going. It has been on my list of things to do for a while.
So, what better time than when I am staying in with no place to go? The excuse of "I will get to it when I have some time" doesn't hold water now. I'm home, she's home and so we committed to each other that we would work on our monthly budget and report back next week.
There is a sense of financial uncertainty among many people these days. And it's understandable. Some economists are predicting a significant coronavirus-sparked drop in our economy, with up to 32% unemployment and a 25% contraction in gross domestic product.
We may not be able to control the economy, but we can plan ahead and manage our personal finances as carefully as possible.
So, let's be proactive and get a real sense of what our monthly expenses are and if there is a way of lowering them. Here are a few simple steps to reviewing your monthly expenses.
The first step is to list every fixed monthly expense you have. Things like your mortgage, rent or your monthly cellphone bill are usually pretty set in stone or relatively close in cost each month.
Next, list all the expenses that vary such as groceries or gas. Think of everything you spend money on. Some people will actually track in a notebook every dollar they spend for a week so they don't overlook things like coffee or meal deliveries. Finally, take any semi-annual or annual payments you make for something and figure out what that cost equals on a monthly basis. By doing this you will have a very good idea of all of your expenses.
I always break expenses into two categories: those that are set in stone and those that I have some control over. For the line items that are set in stone like a mortgage, it isn't easy to really adjust that without refinancing. But for many of the other bills and expenses you may be able to make some adjustments.
For example, is it time to call your Internet or cable company and ask if there are any promotions you could take advantage of? I have done this and was able to lower my cable bill by $30. Look carefully at each expense and see if there could be a way to lower that cost. Call the companies and find out if there might be a less expensive plan than the one you are currently using.
For spending at the grocery store or pharmacy, is there a way you can lower those bills. Can you sign up for store reward programs? If you haven't yet, you should. It is one of the best ways to lower those expenses. Use coupons or coupon apps. Take advantage of buy-one-get-one free offers. Always look at the stores weekly sales and plan ahead.
One way to lower your monthly expenses is to stretch things out. I have a friend that decided to go every 8 weeks instead of 6 weeks for her haircuts. Another person I know who had a housekeeper every two weeks switched to every three weeks.
Take out your credit card and debit card statements, look for any reoccurring charges and decide if it is necessary. I did this several years ago and found over $100 a month on reoccurring charges for things I wasn't even using. But it's easy to put off calling to cancel when you are busy with work, kids, parents and more. Just pick up the phone or go online and cancel.
By doing this exercise you will at the very least be aware of where your money is going. You will also be able to decide if you need to cutback or make adjustments. Remember, knowledge is power, so let's empower ourselves.
About the author: Jeanette Pavini is a two-time Emmy Award winning consumer reporter and author of more than 10,000 money-saving stories. She is a columnist for The Street's Retirement Daily, and has been a contributor for various news outlets including The Today Show and Hallmark Channel's Home & Family. Her work has appeared in The Wall Street Journal Weekend and USA Today. She was the chief consumer reporter for CBS 5 News in San Francisco where her money-saving segments became the backbone to her 30-minute consumer show.