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With the stock market's recent selloffs, job cuts, declining home values and all the talk of a recession, Americans are no doubt feeling poorer and more economically vulnerable.
Can't do anything about that, right?
Yes and no.
We can't control Wall Street.
We can't control the housing market.
We can't thwart a recession
We can't give ourselves a raise. But there's one thing we can do to make our own economic situations a little more stable.
Spend less money and save more.
"The only thing we control is our cashflow, how we spend our money. Everything else — market returns, inflation — is beyond our grasp," said Tom Nichols, certified financial planner at Rinehart & Associates in Charlotte, N.C.
It might feel like there's no money to save. Many of us live paycheck to paycheck. Our credit card bills are staggering. How do we set aside any extra cash?
For starters, pay yourself first. Put a little money away from every paycheck, not just in your 401(k) for retirement (though definitely do that) but also in a rainy day savings account. Make that priority No. 1, before you factor in rent or your mortgage or groceries or trips to the mall or cable TV and Internet service.
That way, when it feels like it's pouring — you're hit with unexpected medical bills or home re-pairs or you don't get the bonus you were counting on or gas prices hit $4 a gallon (gasp!) — you have some cushion.
Second, set a budget and stick to it. Boring, right? Or maybe it's overwhelming. Well, why not tackle one little thing at a time? Splurge on a fancy coffee once a week rather than every day.
Then, take on something bigger, like what you spend on food.
"That's the big black hole in a lot of people's budgets," Nichols said.
Eat at home more. But keep in mind you'll save the most money by cooking from scratch as much as possible. All the heat-and-serve entrees grocery stores stock these days can cost you as much as a take-out meal would. Limit those selections and processed foods — precut veggies and frozen meals — to get the most savings.
Another savvy grocery shop-ping strategy: go with a list and limit your trips to once a week or once every other week. The more often you go to the store the more impulse purchases you'll make and those can wreck your food budget.
A colleague shared with me how she has recently cut her family's food bill. She thoroughly plans out her family's meals because she shops for food only every other week. The meat she buys has to be on sale, and fruits and vegetables have to be in sea-son.
"If it's not in the house, we don't eat it. It does take planning and we've had a few bumps along the way, but I save about $60 every other week this way," she said in an e-mail. "And I've become a more creative cook. Not more competent, just more creative. The savings add up after a while."
Still, you have to treat yourself. Maybe you have dinner out twice a month rather than several nights a week.
Or you order a pizza on a night you're too tired to cook. Or maybe you make a deal to go out only to restaurants where you have a coupon for or that cut prices on their slower nights.
Living on a budget is like dieting. You have to factor in some rewards or you blow the whole thing.
"Make goals that if you save a certain amount you can reward yourself," Nichols said. "That's the big thing. You can't make it painful."
Third, stop trying to keep up with everyone else. It's tempting to match your friends, co-workers and neighbors. But don't do it.
If you're jealous of your friends who have better toys (iPhones, Wiis, SUVs) and bigger houses and who take fancier vacations, give it time. In a couple of years, they'll envy you. They might never tell you that, but they'll be thinking it.
Whenever I meet people my age or younger (sigh) who have socked away thousands of dollars more than me — I'm very jealous. They have bought themselves something that can't be found at the mall, something priceless: a little economic security.
