Page 556 - Introduction to Business

530 PART 5 Finance

EXHIBIT 15.6
Simple Methods to Cut Expenses

Method Monthly Savings

Subscribe to newspapers and magazines rather
than buying them on newsstands. $10
Buy food in larger quantities. $40
Use newspaper and magazine coupons. $10
When vacationing, stay in less expensive hotels. $20
Increase insurance deductibles. $20
Fill up with self-serve gas. $10
Do your own laundry. $30
Pay off credit cards faster. $20
Prepare your own tax return. $75 to $225
(per year)
Return recyclable bottles. $5
Bring lunch to work. $100
Quit smoking and drinking alcoholic beverages. $100 to $150
Don’t buy it just because it’s on sale. $5 to $100
Mow your own yard. $20 to $40
Have an interest-bearing checking account. $10 to $30
Learn to do some plumbing and basic household repairs. $30 to $40
Avoid impulse buying. $15 to $30

Any amount remaining at the end of the month is transferred to your savings and
investment envelope. Thanks to the envelope system, you know how much you
have left to spend for any item in your budget at any given time. The major advan-
tage of the envelope approach to budgeting is that it physically divides funds
among your individual budget items. Additionally, it allows you to readily ascertain
the status of any budget item—what funds are currently available for each item.

Checkbook Management

Owning a checking account is essential for managing personal finances. Each
check provides a record of purchases and of paid bills, and the financial record pro-
vided by your checkbook is an invaluable tool for financial planning purposes. To
use a checkbook effectively, you should adhere to the following guidelines:
Enter all checks written on and all deposits made to your account immedi-
ately. Never postpone recording checks or deposits. Procrastination leads
to inaccurate records.
Reconcile your bank statement as soon as possible after the statement is
received, usually once a month.
Always pay your bills at the proper time. If you receive a bill before the due
date, you may wish to postpone payment until that time in order to main-
tain access to your money for as long as possible. On the other hand, if
small amounts are involved, it probably isn’t worth delaying payment and
possibly forgetting to pay on time. Always pay on time. To ensure that
each check is issued on a timely basis, mark the payment due date on your
calendar.

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