With the ongoing economic meltdown, people are clutching onto their wallets tighter than ever. Realizing the ramifications of their spending ways, the general public is starting to be a little more careful about where they spend their cash. Maybe you were penny-pinching during the holidays too, saving a few bucks every chance that you got.
While it is certainly a good idea to cut back on your spending when times get tough, you want to make sure that you are cutting back on the right expenses. An across the board budget cut in the government isn’t all that great an idea and the same applies for the smaller “government” that resides within your household as well. For example, it may be easier to put off that laptop purchase rather than eschew the grocery shopping trip for the week. With this in mind, where should you be cutting back and where should you be holding steady?
Health Always Comes Before Wealth
Since we have universal health care in Canada, this isn’t as much of an issue here, but it is a major issue for many Americans and people who live in other countries where there is no universal health care system. Some people are starting to cut back on their medical and dental plans, because they figure that they won’t have to see the doctor or go to the hospital any time soon. This may very well be true, but the last thing you want to sacrifice is your health. If you find that your current medical plan is too costly, do not cut back on your benefits. Instead, look into an alternative like raising your deductible.
Raising your deductible from $500 to $1000 can result in substantial savings. A higher deductible is much preferred over no coverage at all, because should the worst happen, you don’t want to be stuck with a $100,000+ hospital bill. Investing in your health and its protection is one of the best ways to spend your money.
The Generic Alternative (But Not Cotton Swabs)
Do you absolutely have to buy Advil to cure your headache or will generic ibuprofen do? Must you drink Pepsi or can you make do with the generic cola? The next time you go to the grocery store to pick up a few things, consider the generic alternative. The store brand is almost always cheaper and, for a lot of products, the quality (and taste, in the case of food) isn’t all that different. Many of these stores also have guarantees that if you are not satisfied with their generic products, they’ll give you a full refund.
I have found a few exceptions to this general rule of thumb though. In buying generic raisin bran cereal, there seem to be fewer raisins. That’s not a huge deal, but one area where I never skimp is with cotton swabs. I always spend the extra buck or two to get Q-Tips; the “stick” portion can be very weak and flimsy with the generic version and there may not be as much cotton on the tips.
Finding Fun and Entertainment
Entertainment need not be terribly expensive. As much as I enjoy going to a hockey game or a concert, those can get very expensive very quickly. Instead, look for cheap cultural events in your area. Smaller venues usually have shows for a lower price. Rather than going to the movie theatre and paying over $20 for two people, try renting a DVD for five bucks. For even cheaper thrills that will last you a little longer, maybe you can curl up with one of Barack Obama’s books. This has the added advantage of offering insight and inspiration.
Little Treats with Some Restraint
When cutting back on your budget during this recession, you don’t need to dig yourself into a hole and refuse to spend any money. That’s not good for morale and that will ultimately make you bitter and unhappy. You should still take the opportunity to treat yourself from time to time, but don’t let the credit card do the talking and walking. Go out for dinner, but just go with tap water. Look for affordable restaurants that offer decent food. Better still, eat dinner for free. You can’t beat the price of free.
Where Are You Cutting Back?
I’m a naturally frugal person, so many of these strategies are already a part of my regular routine. If I see that the generic version of something looks decent enough and it’s less expensive than the brand name equivalent, I’m not afraid to give the generic one a try. I don’t know when was the last time that I went to a movie theatre and paid for their overpriced popcorn and pop either.
Has the recession hit home for you yet? Have you started to look for places where you can save some money?