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7 Smart Spending Strategies in a Tough Economy

7 Smart Spending Strategies in a Tough Economy

Even if you have held onto your job during the coronavirus pandemic, you probably are looking for smart spending strategies and have been more than anxious about your bank account.

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7 Smart Spending Strategies in a Tough Economy

After all, the unemployment rate is high – officially it was 13.3% for May, although if it wasn't for a data collections process error, according to the Bureau of Labor Statistics, it would be around 16.3% – and nobody knows what financial future lies ahead.

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7 Smart Spending Strategies in a Tough Economy

So if you're looking for smart spending strategies in a tough economy, you may want to try the following. – Create a budget. – Dine out – at home. – Plan out your meals. – Track your spending. – Before your buy, talk it over. – Keep your credit card information off of websites. – Apply for a credit card.

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Create a Budget

In a nutshell, you can put together a budget by keeping track of your monthly expenses after taxes. Generally, that's going to be housing expenses, food, clothing, health care, transportation and miscellaneous costs.

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Create a Budget

But, of course, it's not that easy. If you have pets, do you spread out those costs over groceries (pet food) and health care (veterinary visits) or stick them into "miscellaneous"?

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Create a Budget

What about the expenses that aren't monthly but show up periodically throughout the year, like back-to-school shopping, holiday shopping, birthday gifts and oil changes?

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Create a Budget

All of that said, it really doesn't matter how you categorize those hard-to-place expenses, as long as you keep track of them somewhere and somehow.There are also numerous ways to keep track of a budget, from using money management apps to budget calendars to writing everything down on paper or in a Word document.

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Create a Budget

You could spend hours and hours crafting the perfect budget – they're that important.

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Create a Budget

Rebecca Hunter, CEO of TheLoadedPig.com, a personal finance website, has a smart suggestion to keep in mind for people creating – or reworking – a budget: Make sure your budget includes some room for fun stuff that you don't need.

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Create a Budget

"So many people are trying budgeting strategies right now and may even try to cut out all wants from their spending. Unfortunately, this leads to impulse buying and, in some cases, racking up credit card debt.

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Create a Budget

A way to prevent impulse buying and to maintain mental health is by allocating a small amount of your monthly budget to wants," Hunter says.

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Dine Out – at Home

So you're tired of sheltering in place, and you want to see your friends and relatives – but from a health and financial perspective, you also aren't sure you can afford to socialize.

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Dine Out – at Home

Lauren Klein, a certified financial planner and the founder and president of Klein Financial Advisors in Newport Beach, California, has a suggestion that may reduce your odds of picking up the coronavirus – and should mean that you'll spend less on entertainment expenses.

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Dine Out – at Home

"Once it's safe to socialize, consider inviting friends and family over to share the culinary skills they picked up during quarantine.

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Dine Out – at Home

Even when social distancing, having the gang over for an outdoor BYOB is a great way to relax while keeping your credit card safely locked away and your budget in check," Klein says.

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Dine Out – at Home

She also points out that, according to the BLS, before the pandemic, the average American household spent about $3,000 a year dining out. So this may well be a part of your budget that needs some work.

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Plan Out Your Meals

Even though groceries are generally cheaper than restaurant food, many people likely spend more money at the supermarket than they need to because they don't have much of a meal plan.

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Plan Out Your Meals

For instance, maybe on a Sunday afternoon, you buy something like ground beef assuming that later in the week you might make cheeseburgers or a hamburger noodle casserole or tacos. You're not really sure what you're going to make with it, but you'll come up with something.

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Plan Out Your Meals

So Wednesday comes, and tacos it is, but you realize you don't have taco shells, or you end up only using half of the ground beef before throwing the rest away because you didn't plan to use it for other meals before it spoiled. And now you've wasted money and food.

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Plan Out Your Meals

Careful meal planning for the weeks ahead before you go to the supermarket may help you spend less.

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Track Your Spending

As noted earlier, having a budget is very important. Making sure you follow it is just as important. Otherwise, it's almost as if you don't have a budget. Mike Earl, a certified financial planner at The Wealth Group in Minneapolis, advises you to go back in time with how you track your spending.

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Track Your Spending

Earl suggests not using or getting rid of apps that help you track spending and manage money – and instead manually track all of your spending. Earl says that he and his wife track their spending in a simple Google Drive spreadsheet.

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Track Your Spending

"While apps and software can be great, being on autopilot in the area of spending and budgeting is not helpful," Earl says. "Since the apps and software usually download all your transactions automatically, it means you're not as mindful about each spending decision."

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Track Your Spending

Earl says that he used the popular money management website Mint.com, for years, "but it never put a dent in how much money I spent. Once I began tracking my own spending in a simple spreadsheet – this was nearly 10 years ago – my spending declined by 35% immediately."

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Before You Buy, Talk It Over With Your Partner or Yourself First

Joyce West is a career, business and executive coach who also owns a resume writing business in San Francisco. She says that whenever she or her husband plan to spend more than $35, they check with the other first.

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Before You Buy, Talk It Over With Your Partner or Yourself First

"Of course, we could spend much more than that and $35 isn't going to break the bank, but it really helps us practice good financial hygiene. Every little bit you save and invest now means you can retire way earlier," West says.

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Before You Buy, Talk It Over With Your Partner or Yourself First

Even if you're single, you can come up with a version of this rule. For instance, maybe you like to impulse shop, and maybe you'll continue to do that, but from here on, perhaps you develop a policy in which you don't allow yourself to do impulse shopping for any item over $35 – or maybe $20 seems more responsible.

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Before You Buy, Talk It Over With Your Partner or Yourself First

If you come up with easy-to-follow spending policies, you may actually start to see yourself spending less money.

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Keep Your Credit Card Information off of Websites

Retailers, whether it's through their websites or in their brick-and-mortar stores, do their best to make the shopping experience as easy as possible.

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Keep Your Credit Card Information off of Websites

But you might save money if you make the shopping experience a little harder, says Baruch Silvermann, the Los Angeles-based CEO and founder of The Smart Investor, a free online academy for investors.

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Keep Your Credit Card Information off of Websites

For instance, Silvermann says that you'd be wise to not save credit card information on websites. Not because of a fear of identity theft, but more along the lines of preventing yourself from using your own credit card information.

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Keep Your Credit Card Information off of Websites

"Online shopping is designed to be fast, convenient and easy, and it becomes even more so with repeat purchases," Silvermann says. "However, you can create a little time to think if every time you want to buy something, you need to pull out your card and type the information in before you click buy.

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Keep Your Credit Card Information off of Websites

Sometimes that extra five minutes that you need to key in your contact and card details will be enough to deliberate whether this purchase is a necessity or not."

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Keep Your Credit Card Information off of Websites

In general, Silvermann says, if you can wait a couple hours before buying things, you might be able to figure out if this is something you truly need or more of an emotional spending purchase.

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Apply for a Credit Card

This is good advice for some people; terrible for others. If your credit is excellent, and your financial situation is stable – then you may want to look for a credit card with cash back rewards.

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Apply for a Credit Card

If you can find one that offers cash back at 1%, 2% or more on your grocery shopping or gas, purchases you make every month, you could spend less and make your budget go further, provided you pay off your credit card every month and don't carry a balance.

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Apply for a Credit Card

That last part is important – and why this could be a terrible strategy for some. If your finances are shaky, and you apply for a credit card because you are struggling and don't have enough money in your bank account every month, and you are quite certain that you will carry a balance, then applying for a credit card is the last spending strategy you should take on.

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Apply for a Credit Card

These are tough times, after all. Your spending strategies need to make your life easier, not harder.

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