Living Frugally on a Small Paycheck

The following is a guest post by Lisa at Wallet Watcher, an Australian personal finance blog created to help readers figure out how to properly manage their finances.

Times are tight, whether you’re just starting out in the career world, or (as in my own experience) perhaps you’ve been hit by the global recession and then forced to take a lower paying job. Whatever the case may be, many people find themselves having to function on meager paychecks.

This doesn’t mean that you have to live paycheck to paycheck or cover daily living expenses on credit. It just means you have to find ways to make your income go further.

Keep It Simple, Sweetie

Some people are intimidated by the word “budget.” They think it requires a lot of complex mathematical equations, becoming an Excel spreadsheet guru, or purchasing expensive personal finance software with lots of bells and whistles. There is an easier way! Keep it simple. A budget may be implemented by using something as basic as a ledger book purchased at the office supply store – or even just a spiral notebook! The important thing is to consistently log your income and expenditures. Take a weekend afternoon to review your finances. Set up an action plan to manage your financial situation. Visualizing how much you have coming in vs. how much you spend each month will help you

And while it may be true that you’ll have to make some sacrifices, even cutting out little things like your daily visit to the coffee Barista from the overpriced organic restaurant around the corner from your job will make a huge difference.

Live Like You’re a Student

University students generally don’t have very much money, and as a result are forced to find creative ways to make ends meet. Granted, you are probably making more money now than when you were a student, but that doesn’t mean you should abandon your frugal ways.

Taking on some college-life budgeting techniques, like finding a roommate and using public transportation, are great ways to save some money. You can also start buying in bulk at your local wholesaler store: if you can’t afford the upfront investment into bulk purchasing, grab a friend and head off to CostCo together. Agree on the most important staple foods prior to purchasing. Divvy up the items later on.

Shop on the Fringe

When the economy took a dive in 2006, thrift stores, consignment shops, pawn shops and food outlet retailers found their businesses booming. Some of my best purchases come from the thrift shop. From a new business suit, to snow boots, to furniture, shops like ARC, Goodwill and Habitat for Humanity truly turn “one man’s trash into another man’s treasure.” And the great thing about it is that a portion of the proceeds go to a worthy cause. Food outlets are another resource that more people are utilizing. End-of-lot specials, cans with small dents, and staple foods like cereal, noodles or rice which are slightly past their expiration date are some of the bargains you’ll find at a food outlet retailer.

In all, times are tough, but that doesn’t mean your finances have to suffer completely. With some smart moves and fiscal responsibility you can make ends meet while you find your way.

What bargain outlets do you utilize in trying to stick to a family budget? Share your tips with us here.

Lack of Energy Price Awareness Could be Costing Brits Dear

Compare gas and electricity prices at Moneysupermarket.com has revealed that 40 per cent of people in Britain don’t know how much they pay for their gas and electricity.

Moneysupermarket.com surveyed more than 3,000 visitors to the site to build up a picture of UK spending on energy and found that more than a third of people don’t know what their bills amount to. Just 38 per cent of people surveyed knew how much their energy cost them, while 24 per cent said they knew roughly what their costs were.

The warning message being sent out to those who do not keep an eye on their gas and electricity spending is that many suppliers increase their prices year on year and that better deals and tariffs could be just a few clicks away.

Scott Byrom, utilities manger at moneysupermarket.com said: “With the current spate of price hikes taking the average bill to record highs, customers should be on their game and know exactly how much they are paying in gas and electricity charges each year. The message is simple – for a medium user, if you pay more than £37 for your electricity and more than £51 for your gas per month, then you are potentially paying too much and should be looking to switch to a better tariff.

“Shopping around using a price comparison site for the best value energy product is vital and I urge everyone to check their bills and act quickly as the best priced products are unlikely to be available for long.”

 Gas and electricity costs are most people’s second largest monthly outgoing after rent or mortgage payments. Moneysupermarket estimates suggest that many of those who are unaware of their energy spending could be paying as much as £411 more than they need to, with the most expensive tariff coming in at over £1,391 compared to the current cheapest at around £980.

On average, only 17 per cent change the tariff they are signed up to each year.Scott Byrom, utilities manger at moneysupermarket.com said: “With the current spate of price hikes taking the average bill to record highs, customers should be on their game and know exactly how much they are paying in gas and electricity charges each year. The message is simple – for a medium user, if you pay more than £37 for your electricity and more than £51 for your gas per month, then you are potentially paying too much and should be looking to switch to a better tariff.

“Shopping around using a price comparison site for the best value energy product is vital and I urge everyone to check their bills and act quickly as the best priced products are unlikely to be available for long.”

Engine Size Matters

For young drivers who have just passed their test and are looking to buy a car, then there are lots of ways they can save money. For cheap car insurance for young drivers, it is important to shop around to compare prices, as well as comparing what the policy is offering. By using a comparison tool, you can easily find the right cover at the right price.

Car insurance will always be more expensive for young drivers, due to their lack of experience on the road and whilst buying your own car may feel more liberating, it is worth considering being a named driver on a parent’s policy. After a few year’s experience as a named driver, you will find that premiums are lower. If you do want to buy your own car, then there are lots of ways to find cheap car insurance for young drivers.

Firstly, try to buy a car with a small engine size. This will make a big difference to the cost of insurance, as will not buying an expensive make and model. Look for a make of car you like and then find the smallest engine size you are happy to have. If you buy a larger engine size or one with a modified engine, the insurance premium will increase dramatically. Car tax will also be more expensive for cars with larger engines.

 

The car you choose should be in good working order but should not be too expensive. When telling insurance companies how much your car is worth, remember not to overestimate its value. Be truthful otherwise all you will be doing is increasing the premium. If you have to claim, insurers will only pay the current market value for the car so there is no benefit if you unnecessarily inflate the value.

Decide which type of insurance you need. Compare fully comprehensive policies with third party, fire and theft. If you shop around, the difference between the two is not always that much and you may benefit from having a fully comprehensive cover.

Choosing a policy with limited mileage can also be cheaper. Although you will have to make sure you do not exceed the annual limit, therefore making your policy invalid, selecting a limited mileage policy can reduce premiums.

By choosing a higher voluntary excess, some insurers will give you a lower quotation. Obviously this does mean you need to make sure you can afford the higher excess in the event of a claim.

When selecting your policy preferences, always check whether you actually need added extras, such as breakdown cover, legal expenses and courtesy cars. Your premium would be lower without some of these features, so double check when you are researching.

With half of all car thefts happening at night, keeping your car in a locked garage can also reduce premiums. Ensuring your car is fitted with an approved alarm can also reduce the cost.

When applying and paying for your car insurance, processing costs should be kept to a minimum so therefore buying online will be a lot cheaper.

Finally, young drivers who choose to complete the Pass Plus course, having passed their driving test, can often get cheaper car insurance. The course gives new drivers further experience to increase confidence in all-weather driving, town and rural roads, night time driving and motorways and dual carriageways. Having completed a Pass Plus course, insurance companies may offer lower premiums or extra no claims bonuses.

If You Must Eat Out: “Reheat Value”

The following is a guest post from Brian at Health Insurance Comparison, an Australian personal finance blog that’s goal is to help buyers know what they should compare when it comes to health insurance.

If you really want to save money, eating out is usually one of the items you cut first. It has been known to break the most promising of budgets, and it can happen (or keep happening) to you as well. But we all slip sometimes, so here is a tip to saving money when you eat out.

Two Realities

Let’s get something out of the way quickly. Unless you are on an extremely tight budget and/or have an impressive amount of willpower, you’re probably going to have to accept two realities:

  1. You’re Going to Eat Out

Yes, it’s going to happen. Sometimes the finger points to you, your significant other, or those lovely children – but it’s bound to happen. Certainly acceptance can help with the stress and anxiety, as well as taking it on reasonably.

  1. Eat Out Well

If you eat out, do it right. No, this doesn’t mean pig out at the local buffet. Rather, this means that if you’re going to do something that isn’t traditionally in line with saving money, find a way to make it a bit more reasonable.

With that in mind, these topics naturally lead us to the “promised land” of eating out on a budget…

The Wonderful “Reheat Value” Phenomenon

As a lover of pizza, I can’t help but shudder at those who reject commercial pizza places. Can local pizza joints taste better? Absolutely. However, you can’t deny that the commercial chains offer a great reheat value. This is one concept that you don’t want to miss.

Keeping with this theme, let’s say that you get a great deal: $10 for a large, unlimited-topping pizza. For some, two pieces of a large pizza is enough to stand as a meal. At eight slices per pizza, that’s four meals. That means you’re paying less than $2.50 a meal.

In the grand scheme of eating out, that’s not bad. It all comes down to reheat value.

It is reheat value that allows you to enjoy leftover pizza near the same quality as the original. When you combine reality numbers one and two, and add reheat value as a guiding force (or “The Force”), you might be able to keep your budget afloat – yes, even when you eat out.

Spend Your Money Well

On many tight-yet-reasonable budgets, eating out is something that can be done from time to time. In the previous example, you would get a reasonable deal for a luxury item in your budget.

As you search for coupons, evaluate great deals on all types of restaurants, and much more, don’t ignore the reheat value of food. The ones that reheat the best in my opinion are Chinese, Mexican, and Italian. When you look at the numbers, you might find that eating out once in a while could be the frugal thing to do.

What restaurant foods do you think reheat well?