Give your Budget a Tune up

In many areas of North America, house prices have risen so high that it is only with a good bit of work that many can afford to purchase a home. In some parts of the continent, where prices have jumped the highest, a full 70% of the population cannot afford to buy a median-priced home. It is possible, however, to combat this situation--at least to some degree-- by getting a firm grip on your current (and future) budget. Not only will it help you to afford your home, those with their budgets in check generally live less stressful lives and, by efficiently handling their finances, have more funds available for the things that they truly need and want.

Getting control of your financial situation generally involves one or two big steps and, frequently, a number of smaller ones. The combination of the moves you make to get your budget in line can make a huge difference in your overall financial posture. It can make the difference between affording--or not being able to afford--a home. It can mean a comfortable home ownership experience, or a harried and distasteful one.

Taking Control
The very first step in taking control of your finances--and your budget--is developing a minset that says you CAN be in control, that you CAN become budget minded. If you've spent years as a spendthrift, this may take some getting used to. Instead of "I deserve it," you may need to begin saying "I really don't need it." You may need to put a leash on some of your expenditures. The easiest way of doing this is to understand that there is a big difference between what you WANT and what you NEED. For example, you may WANT a big
gas-guzzling SUV, but what you NEED is probably just a vehicle that will get you back and forth to work reliably.

Compare
One of the most important steps in getting your budget in line is to begin the process of comparison shopping for virtually everything you buy. If you currently make purchases for convenience rather than price, this new approach may take some getting used to, but eventually it will become second-nature.

+ Learn which grocery stores have the lowest overall price and do the bulk of your shopping there.
+ Watch for sale prices in ads and circulars--buying like this can reap big savings over time.
+ Use the Internet to make comparisons. There are numerous sites that will do the actual price comparisons--including shipping--for products you need to buy. This is an especially effective tactic in the purchase of higher-ticket items.

Large or small--It all adds up
Although keeping tabs on the big expenditures (cars, furniture, appliances and the like) show the quickest rewards, your total spending for smaller items (groceries, fuel, supplies and services are some examples) can also have a big effect on your bottom line. For example, do you stock up on items when they are on sale or do you pay full price when the whim hits you? Do you use generic or store brands, which are often 25-40% less than name brands? If you insist on name brands, do you clip coupons (and use the coupons at stores that double or triple their value)? Are you paying for cellular minutes that you rarely or never use? How about premium cable or satellite packages with stations that you almost never watch? How often do you buy trinkets and "toys" that you never use or even look at much less use?

Saving money here--on these smaller items--really does add up. Just a few slight adjustments in buying approaches and habits can often save $30-40 per month in your grocery bill, for example. Eliminating an "upper tier" on cable or satellite may equate to another $25 per month or more. Buying less "junk" that you don't use can show considerable savings, depending on how much a "junk" shopper you are. Unless you are currently a "bare bones" spender, it is not unusual to be able to cut $100, $200, $300 or more from your current monthly spending patterns. And that adds up to big money, even before you factor in the interest that you can gain on the money you put away. Don't forget to shop for the best interest rate, too, since on a money market (where you can have near-immediate access to your cash) interest rates can vary from less than a quarter percent to over 5%--more than 20 times more interest!

Summing Up
Even if house prices retreat a little in the near future, the big run-up they've enjoyed in the last few years virtually guarantees that prices will still remain at a high level. This means that you will need to be much more conscious of budget considerations than you would have needed to be just a few short years ago. Having a handle on your budget and finances may be the difference between being able to afford a home and not affording one--especially if credit availability and standards tighten.