Run Your Home Like a Business
June 5, 2007
Flickr Photo Credit: Jay Cox Film
Hold on, I’m not saying you need to treat your family members like employees. What I am saying is that if you are really serious about getting your finances on track, you need to manage your household budget as if it were a functioning business.
That means, if you have a line item allotment total for groceries or utilities, and you go over that amount on a particular month, you need to find the money from another category. Or, better yet, don’t go over budget in the first place.
Looking at making a purchase you think will save you money? Calculate your R.O.I, or return on investment. If a blender is 40 dollars on sale, and you’re willing to commit to using it in a way that will save you 20 dollars a month, then your R.O.I. is two months. Past that date, any money you save will be money that you wouldn’t have had otherwise, a kind of profit, so to speak. You can use this technique with virtually any money saving purchase you are considering.
Planning on stocking up on a particular grocery, toiletry or office supply item? Do you know how much that item costs on a regular basis so you know whether or not you are getting a good deal? Or has the store raised the price and advertised the item in their sale flier to entice the less savvy consumer? One way this is done regularly is with the buy one get one free “sales” many stores have. Sometimes, this is a good deal. But not always. Often, you are buying the items at way more than you would have paid for them anyway. For example, a two and a half pound bag of carrots for 4.99 on a buy one get one free “sale” is actually $1.o0 a pound. As a rule, I rarely paid over 35 cents a pound for carrots when we lived in Tucson, which is where I saw this same “sale” advertised. Some people stay informed on prices of regularly purchased items via a price book. I’ve got to admit, I haven’t made it there yet. I’ve been getting by with keeping the information about our commonly purchased things in my head. However you approach this, the main thing is just to be informed when you make your buying decisions.
One last technique I’d like to mention is to routinely shop your service plans and interest related accounts. What I mean by that is companies compete all the time for your business. Whether it’s a better all inclusive plan for your long distance phone service, a better rate on a credit card bill or mortgage payment, or a higher rate of return on your online savings account or CD, there is money to be made and saved by shopping around for better rates and deals. You may also find that a company you are currently with is willing to meet or beat the rate of a competitor to keep your business.
These may not be all of the strategies out there to put to use, but they should get you started on the road to financial security and independence. Are you ready for the ride?