By April Sorrow
University of Georgia

“You can increase the amount of money you have to spend each month by as much as 20 percent by paying more attention to where your money goes and developing an action plan to target problem-spending areas,” said Michael Rupured, consumer economic specialist with the UGA Cooperative Extension. “Paying more attention to the family budget can also go a long way toward preparing your children to be good money managers.”

To find out where your money goes, track it. Record everyday purchases for a few weeks to determine spending habits. Costs associated with daily activities like smoking, eating out and buying coffee to go can add up in a month. And the longer you keep track, the more you will learn about where your money goes, he said.

Another way is to see how low you can keep your expenses for a few months. For example, pretend your income has been cut in half, Rupured suggests.

“Stripping away all but essential spending can be an eye-opening family activity,” he said. “At the end of the trial period you can make decisions about which of your normal expenses you want back and which you are happy to live without. The best part of this option is the opportunity to save as much as half of your income for several months.”

With both approaches, the idea is to really think about where your money goes.

“Spending is such a routine part of life that it’s easy to lose track,” Rupured said. “You can’t know what you should do differently until you know what you’ve been doing with your money.”

To identify where you are spending the most, group regular expenses into categories. Combine similar expenses into one category. For example, add up the total spent on utilities such as water, electricity, gas, cable and phone bills. Required monthly payments for credit cards and non-mortgage loans can be lumped together into a debt category.

Once spending habits have been identified, work to change areas where you are spending more than you’d like to.

Encourage everyone in the family to get involved. Talk about the budget and ways to cut spending. It is often better to find cheaper alternatives than to cut something out all together, he said. For example, eliminate the weekly trip to the movie theatre, and rent a movie and make snacks at home. Or, borrow a movie from a friend or check one out from the library.

“Whatever the family decides, write it down and have everyone sign it,” he said.

Put the plan where the whole family will regularly see it. It may help keep them focused. Review spending habits every couple of weeks and discuss the status with the whole family.

“It is a good idea to decide upfront what you will do with the money your family saves by reducing spending,” Rupured said. “Family members will be more committed to the task if they know what the reward will be and how the savings will be used. Be sure some of the money saved gets put in the bank for emergencies or family goals.”

(April Sorrow is a news editor with the University of Georgia College of Agricultural and Environmental Sciences.)