Reducing personal spending

By Brett Anderson

St. Croix Advisors

This is a topic we often know needs to be addressed, yet we keep putting it off. Reducing personal spending, however, is something that we need to be reminded about every once in awhile.

In times of recession, almost everyone has to reevaluate their spending habits and figure out what they really need versus what they want. The recession has also given people a bigger reason than ever to start saving money and diversifying their financial portfolios.

In order to reduce spending you need to first realize what you are spending money on. In order to begin this process, track what you buy for a month by saving receipts and keeping a journal of expenses.

To be accurate, you must record everything, including the small things such as coffee and gum all the way to the larger things such as a TV. Categorize your spending into necessities such as food, water, shelter, clothing, transportation and whatever else you need to live. In another category place your enjoyable expenses, such as that extra cup of coffee in the morning, a big screen TV, unnecessary gadgets, etc.

After you figure out where your money is going, figure out where you can cut back. Every person has expenses they can cut back on and start to put in savings. By reducing your spending on a few items, the dollars saved can start adding up quickly.

While you are working on cutting down your personal spending, you should also be talking to your spouse about the whole family beginning to save money. The more money you’re able to save, the more sound your financial outlook and the less you need to worry about for the future. Saving doesn’t have to mean not living a fun enjoyable life, it purely means being smart about where you are putting your hard earned dollars.