Cash-flow problems can be a common occurrence in many households, particularly single-income families or expanding families. With price hikes in just about every area of household expenditure, it’s more useful than ever to have some helpful blueprints tucked away under your belt for controlling cash flow. The following practical insights will see you reducing your expenses around the house.
Reducing Expenses or Increasing Income
There are many ways to reduce your everyday living expenses. You can switch electricity or gas providers for a better deal on your energy costs, or shop only with specials or bulk discount offers. You might choose to conserve, along with shopping around, and cut spending by simply using less of a service or product.
You could also find extra work, ask for a raise, or supplement your income by doing contract work. A double strategy of reducing expenses and boosting income can be effective for freeing up more cash and improving your cash-flow situation.
Home Improvements for Cost-Efficiency
You can make improvements around the house to improve the cost-efficiency of your home, in order to free up more cash.
- Insulation –Good insulation means you need less energy to cool or heat your home to a comfortable temperature.
- Energy efficiency –The good news for households that have experienced an energy-bill shock is that everything from appliances to lighting can be enhanced or changed to boost energy efficiency.
- Generate power –The most common way of generating your own power is to install solar panels. These supply power to heat water and appliances around the home.
Tricks to Cut Spending
Other than vital expenses, how can you cut back on non-essentials and luxuries? Sometimes, it’s not a matter of discipline but habit and building barriers to mindless spending. Simple tricks to cut your spending include:
- Budgeting –Budgets encourage better financial control and management. Make a budget, record what you spend and review it. The more you do this, the more conscious you’ll be of your spending decisions.
- Going for freebies –It can be surprising just how many freebies there are available, particularly if you live within a large city. Check out local papers and Internet listings for free gigs, cheap meals, sample nights, or other specials for entertainment and leisure activities.
- Making a list –Mindless shopping is probably one of the biggest sources for non-essential spending. When you’re going shopping, make a list of essentials and avoid deviating from it, no matter how attractive the discounts on items that you don’t need might be.
Smart Money-Management Strategies
You can extend your cash-supply cycle and encourage saving with some smart money-management strategies like the following:
- Credit card –Using your credit card’s extra interest-free period could see you saving hundreds of dollars over time. For example, those with homeloans can buy groceries with their credit cards, while keeping cash from their paycheques in a mortgage offset account until the interest-free period expires. You’ll earn extra interest, and the strategy is as easy to implement as a few automated or well-timed payments.
- Cash spending –Don’t use your credit card for anything other than vital spending. Withdraw a fixed amount for everyday basics and forbid yourself from spending more until the next spending cycle (week, fortnight or month) comes up.
- Savings account –If you have spare cash saved up (perhaps for a deposit for your home or some other investment), you should have at least a savings account with high interest rates or a term deposit. You’ll earn as much interest as possible by keeping your money in these types of products.