Ramsey County

Making $ense of Dollars and Cents

April 27, 2009

Sizing Up Your Financial

            When financial problems occur, the first reaction many people have is to try to hide financial problems from themselves or family members. Not facing your problems can be very destructive because the worry and stress caused by financial uncertainty and lack of cash may be worse than the financial problem itself. It is important to look realistically at your situation and actively seek solutions to your problems, despite the discomfort.

            Because spending decisions affect the whole family, talk with your family about the situation. Let them know the family needs to change its spending plan. Involve everyone when setting spending priorities. If family members understand the tough choices that must be made and have a voice in the process, they will be more willing to accept the decisions.

            Studies show that most families respond to reduced income by cutting their spending for nonessentials such as vacations, eating out, and home furnishings. As the reduced income continues, many families also report reduced spending for basic needs including food, shelter, transportation, and medical care.

            Fewer families report increasing their income or using more credit to manage finances. Borrowing or using credit to pay bills often brings only temporary relief. For those families who did increase their use of credit, the more they borrowed, the more unhappy they were with their financial situation.

            Studies have also found that families who quickly made changes in their spending habits were the most satisfied with how they were managing. Families who did not make changes felt more out of control and more dissatisfied.

            A spending plan is always an effective tool to help you get the most for your money. It is even more important when you have a sudden change in your income. A spending plan helps you:: make decisions about how to spend your money , provide for needs before wants ,match your spending to your current income ,prevent family arguments over money

            Once you have a spending plan that sets spending amounts for essential family needs and balances your spending within your income, you have to stick to it. Writing it down is not enough. You must use the plan to guide your spending.

            Keep a record of what you spend in each expense category to be sure you do not exceed the amount on your spending plan.

            Living on a reduced income may be temporary or prolonged. Getting the most from family income during this time requires careful planning and wise spending decisions.

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524 4th Ave NE #5, 2nd Floor Ramsey County Courthouse
Devils Lake  ND  58301
701-662-7027
email - NDSU.Ramsey.Extension@ndsu.edu