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In the News - May 2009
Setting spending priorities in tough economic times
PINE BLUFF, Ark. - Responding quickly to financial problems and being an
active participant in managing money both in the good and the not-so-good times
are essential to building a secure financial future for your family, says Rita
D. Conley, Cooperative Extension Program family resource management specialist
at the University of Arkansas at Pine Bluff (UAPB).
But, research shows that many take a “wait and see” approach and do not
adjust their lifestyles until six months after their income is reduced. It’s
these six months that can lead to financial disaster, says Conley, who advises
consumers to take action immediately.
Setting spending priorities is the essential first step to managing with a
reduced income. And, since the entire family is impacted, she advises including
the entire family in the process.
Conley provides the following steps to help in developing a spending plan and
setting priorities:
- First, list your total monthly income from all sources.
- Second, list your most important expenses. These are basic
living needs you must have such as housing, utilities,
transportation, food and insurance. Then, list other expenses,
such as cell phone, cable TV and eating out. Reducing other
expenses is difficult, but it is important to provide for needs
before wants.
- Third, list all debts, such as credit cards, student loans,
etc.
- Finally, add all your expenses and subtract this amount
from your reduced income.
The goal of this process is to reduce spending to equal your current new
income, says Conley. She advises calling all creditors before the bills are due
and to explain your situation and inquire about any programs available for those
experiencing financial hardship. Some programs may include reducing payments
while keeping the accounts current. And, don’t promise to pay creditors more
than you know you can afford.
Getting spending to equal income is not easy. She says to look for ways to
earn additional income and check into social service programs, such as help with
food assistance, housing assistance and medical care for children.
Any new spending plan or list should include a column for what is due monthly
and columns that coincide with the frequency of pay periods, such as weekly or
biweekly. This format is useful in making sure you know which bills are to be
paid at each pay period and shows how much money should be allocated to certain
expenses out of each pay period, says Conley. The entire family should review
the plan weekly to ensure bills are paid on time to avoid late fees and plan for
unexpected events.
With the entire family involved, there is often more support and pulling
together among members to get through difficult times.
May 8, 2009
By Carol Sanders
Writer/editor
UAPB School of Agriculture
Fisheries and Human Sciences
(870) 575-7238
sanders_c@uapb.edu
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