A Publication of
est. 1851
TAKING CONTROL OF SPENDING
Most money goes to housing, transit, food Those areas offer opportunities for cutting back METRO NEWS SERVICE Who hasn’t tallied up monthly bills or looked at a credit card statement and pondered if they’re spending a little too much? The average person also might wonder how their expenditures compare to other people around the country and what they need to do to enjoy financial freedom in retirement. According to the U.S. Bureau of Labor Statistics, the average American household spends just about $57,000 each year between necessities and luxuries. So how are people allocating their funds? The results might surprise you and indicate where it’s possible to trim some fat and save big bucks. Across America, housing is the largest line item in people’s budgets. Various sources suggest that housing and shelter needs account for anywhere from 30 to 40 percent of most household budgets. By making housing decisions based on areas with the most efficient cost of living, individuals can save considerably over the long run. The second largest expenditure cate-
gory is transportation. This accounts for the cost to finance or lease a vehicle and insure it, and it also includes urban dwellers who rely on public transportation or ride-share services to get around. Keeping transportation budgets in check can be great a way to save. Food is the next largest expense. While everyone needs sustenance to stay alive, how that money is allocated can make a big difference in saving versus spending. The Bureau of Labor Statistics says that food at home costs around $4,000 a year, while spending on dining out amounts to around $3,100, for a grand total of $7,100 each year. Cutting back on dining out can be a great way to save money, as can becoming a more sale-conscious grocery shopper. Health care, utilities and entertainment are the next most costly expenditures, respectively. But each of those items are considerably less expensive than the top three. Therefore, making changes to where one lives, how one gets around and how one eats can certainly add up to considerable savings.
Metro News Service
So how are people allocating their funds? The results might surprise you and indicate where it’s possible to trim some fat and save big bucks.
INDIVIDUAL FINANCES
Here are some simple ways to maintain a realistic budget Process provides stronger grasp of financial situation METRO NEWS SERVICE Successful financial plans often begin with the creation of a budget. A budget is an estimate of income and expenses in a given period of time. Budgets help with long-term goals like paying off a mortgage or sending a
child to college as well as short-term goals like financing a dream vacation. Not all budgets are alike, and when people hear the word “budget,” they may get apprehensive. Budgeting might require making some concessions in regard to spending habits, but it doesn’t have to put a complete damper on plans. In fact, with a budget in hand, people might be more free to spend because they will have a stronger grasp of their financial situa-
tion. Making a realistic budget does not have to be a chore. Here is how to get started. • List the necessities. Begin by calculating the costs associated with fixed needs, including rent/mortgage, utilities, food, and any other bills you have to pay each month. • Add existing debt. Debt includes any routine payments being made to credit card companies, student loan lenders,
car payments, or unpaid medical bills. • Conduct a spending analysis over several months. Budgets are easier with fixed numbers, but unforeseen variables can affect spending every month. These can include the extras for clothing, entertainment and much more. Average the cost of these expenses throughout your analysis period so you can get some idea of how much to allocate for them.
See BUDGET, Page 6