8 Ways to Live Below Your Means

Yes, it’s challenging to live below your means but if you resolve to actually do so, it is possible. Here are some practical ways to get you started:

1. Don’t buy something if you cannot afford it. If you want to purchase something, look at the price tag. If you don’t have that amount to spare after all your necessary expenses have been deducted, don’t charge it to credit. You will still have to pay for it later on. Also, don’t dip money from your emergency savings fund just to be able to get it. Keep your emergency savings for real emergencies.

2. Eat and relax at home. Try tallying how much you spend for restaurant meals in a month and you’ll be shocked at the money you are throwing away. Do the same for those little knick-knacks and whatnots you buy every time you go to the mall. If you stay and cook your meals at home and watch videos or play board games together, you won’t have to spend for gas to go to the mall or buy food or other unnecessary things you see there on impulse.

Try to do this for at least a couple of weeks and then a month and you’ll realize that staying at home will help you live below your means without sacrificing the quality of your leisure time. In fact, it can even make your family closer.

3. Follow a budget. Without a spending plan, it’s going to be very difficult to live below your means because you won’t know where your dollar goes. With a budget, you allocate money where they are needed and ensure that you don’t go overboard spending in one category. Always make room for savings in your budget and automate payments if you can. This ensures that you are able to pay all your bills on time.

4. Keep yourself healthy. The healthier you are, the less you will have to spend for medical expenses like doctor’s visits and prescription medication. Sure, you have your insurance to take care of all these but you will still have to shell out for copays and drugs that are not covered in your plan. So follow an exercise regimen each day, eat right, and avoid vices that will jeopardize your health. You’ll find that living below your means is easier if you don’t have to spend so much for medical expenses.

5. Don’t buy on impulse. If you see something that you want, get out of that area and wander somewhere else. Chances are, you’ll forget that thing in an hour or less. If the thought of buying it still lingers, go home and evaluate if you truly need it. If you don’t, then don’t waste money on it.

6. Brand name products are usually more expensive. You can find better deals on non-branded items that are just as durable and/or fashionable. Knowing where to shop and what items to substitute for branded stuff enables you to save more.

7. Focus on your finances, not on the Joneses. You know where your finances stand. Constantly comparing yourself with the Joneses is not going to grow your bank account or increase the value of your investments. In fact, it’s going to do just the opposite. So set your mind to live below your means and forget everyone else.

8. Be a wise buyer. If you want to get more for your bucks, you have to know how to buy and where to buy. Use coupons to lower the cost of your grocery bills. Buy second hand items if you don’t really need it brand new. Buy in bulk the things that you are going to be using every day.

Yes, it’s challenging to live below your means. But the rewards are certainly worth it: A decent and comfortable life now and financial security for the future. Aren’t these worth all the sacrifice?

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The Challenge of Living Below your Means

It’s not easy to live below your means. In a world fraught with consumerism and keeping appearances, you are bound to encounter internal and external challenges that will test your resolve. If you are not determined enough, it’s easy to go back to your old ways and be indebted forever or worse, spiral down towards bankruptcy. So before we discuss the ways in which you can live below your means, let’s first discuss the challenges that you will encounter if you intend to do so.

The lure of instant gratification will be hard to resist. We’re used to wanting new things now, now, now. An upgraded version of your phone or tablet just came out, you need to have it. There’s a more powerful laptop out that you just need to buy. Your friend just bought a gorgeous designer bag that’s simply to die for—you must have it. With your credit card on hand, it’s easy to march to the store and purchase these things with just one swipe. The reality is that if you keep on buying and buying, the charges will just keep on accumulating. Sure, you feel very elated the moment you bring your new acquisition home but it will just become one of your things afterwards.

You’ll still want what the Joneses have. If you’ve been keeping up appearances for your neighbors, it’s going to be a challenge to not do a kitchen renovation when the contractors are busy over at the Joneses modernizing their cooking space. It will be extremely difficult not to sell your relatively-new car so you can afford the downpayment on the manufacturer’s newest model when that same sleek vehicle is already parked in their garage. It’s human nature to want what others have. But you also have to remember that self-restraint is also a natural tendency of human nature—and something that you need to utilize fully when you’re trying to live below your means.

Family, friends, and colleagues will think that you are nuts. Loved ones who see how fashionable and trendy you’ve been before with your constantly new acquisitions will think that something has gone terribly wrong with your thought process when you start living below your means. If you’ve been generous with your money before, they might wonder why you’re getting a bit stingy now. Eating lunch you’ve brought from home instead of accompanying them to the usual hangout for lunch break might seem odd to your coworkers. The only thing that you need to remember when they ask if you need to go to a shrink is this: You know your finances better than they do.

You feel the need to reward yourself often. There’s nothing wrong with rewarding yourself once in a while for a job well done or conquering a seemingly impossible situation. However, this becomes wasteful if you reward yourself for every little obstacle conquered that the reward itself gets to become an ordinary part of your routine. For example, you buy yourself a new pair of designer shoes each time the paycheck comes or go out to eat three times a week at the fanciest restaurant in town. Not only do these put a dent on your budget, they also lose their special significance because they are normal and expected.

Your income increases. You might think that it’s actually easier to save if you get a raise or get a second job. Unfortunately, research shows that your spending is actually proportional to your earnings. If you’re not careful, you could still end up spending most if not all of your money. If you choose to live below your means, you can do so whether you get a raise or not.

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Managing Childrearing Expenses

Having kids is no joke, as the preceding paragraphs show. Then, of course, having children also gives a certain degree of fulfillment and inspiration to parents that money just cannot buy. These do not mean, though, that couples should have or not have children on a whim. The financial and emotional investments of having kids are huge and the stakes are high if you want to raise them to grow up as responsible adults.

If you do decide to have kids or already have them, it’s important to learn how to manage the expenses that come along with them. There are ways to save on childcare that will not deprive your little angels of the necessary comforts of life. Here are some ideas:

1. Breastfeeding is best for baby—and the budget. There are various scientific studies that support the health benefits that mother’s milk gives to baby (e.g. boosts immunity, prevents diseases, and provides complete nutrition for the first six months). It also bonds the baby and the mother emotionally. But as far as the budget is concerned, breastmilk is the ultimate in zero costs. The mother naturally produces it after birth and there is no need to buy it, unlike formulas. There is also less need to buy bottles and sterilizers—unless you need to store your excess milk—further lessening expenses.

2. Try finding second-hand baby furniture from friends and relatives to save on costs. Perhaps they may even give it to your little one for free or for a very cheap price. There are also good deals on these items that you can find on eBay. Just make sure that you give it a very thorough cleaning before you use them.

3. If you have more than one child, you can let them share rooms and toys. This fosters sibling bonding while teaching them the valuable lesson of sharing.

4. Buy in bulk. As your family grows, it is cheaper to buy groceries and staple things that you need at home in larger quantities. This allows you to enjoy discounts. Using coupons will also help you save on grocery expenses. Cooking at home, minimizing restaurant dinners, and brown-bagging lunches are also other ways to save on food costs.

5. If possible, put your children in one daycare center or school to save on transportation expenses and tuition. Schools usually offer sibling discounts if you enroll your kids with them.

6. Start saving for college. There are tax-advantaged accounts like Coverdell Savings that allow you to start putting money away for your child’s college costs.

7. Have a budget and stick to it. If you have not made and followed a budget before, now would be the best time to start doing so. As the kids grow, you are going to incur expenses left and right. Without a budget, it’s going to be more difficult for you to pinpoint exactly where your money went.

8. Save before having a child. Children’s expenses start even before your child is born. There are prenatal and labor expenses, for starters. You will find yourself in a much stable financial footing if you pay for all your childcare-related expenses for your child’s first year at least in cash. This way, you don’t have to charge a lot to plastic and risk having too much debt.

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How Much Does It Take to Raise a Child?

Babies are adorable. Yes, they can be quite a handful when they become toddlers and even more so when they become teenagers. But their purity and innocence never fails to delight our jaded souls. And this is why many couples still want to have kids. But these little souls cost money, too. It might be a bit cold and cynical to look at these children like this but the reality of the situation is that for parents to be able to raise them healthy and well, money is necessary.

The United States Department of Agriculture in its 2011 Expenditures on Children by Families has revealed that in a two-child, husband-wife household with before-tax income of less than $59,410 the cost of raising a child can range anywhere from $8,760 to $9,970 depending on the age of the child. For those with incomes between $59,410 to $102,870 the number is considerably higher. It can cost $12,290 to $14,320 annually to raise a kid. Meanwhile, those households that earn more than $102,870 before tax, the yearly cost of raising a child can range anywhere from $20,420 to $24,510. Depending on the income bracket you belong, you will have to shell out anywhere from $150,000 to more than $400,000 to raise your kids until 17 years old. After that, college expenses are going to be an entirely different cost as well.

If you are staring in disbelief at these figures, perhaps a more detailed look at the different spending categories will make it easier to see just how expensive it can be to become a parent.

1. Housing. From mortgage or rent payments to utility bills to repair and maintenance expenses to furnishings, you need to provide a decent shelter for your child that can also protect him or her from the elements and other dangers. Yes, you may think that you still pay these expenses even if you don’t have children but when they do arrive, the cost increases. For instance, you’ll want to move in to a bigger place which is going to be more expensive to maintain. You will need to buy additional furniture, like a crib, a stroller, and other necessary stuff.

2. Food. Families can save a handful in the first few years if the mother breastfeeds but as the child grows older, grocery expenses will definitely increase as well. Eating out or ordering food to be delivered can also increase as parents naturally love to treat their children to special family dinners out and/if mom and dad gets so busy at work that it’s virtually impossible to cook at home.

3. Healthcare. This one is going to be a major expense if you have kids. If your employer-sponsored healthcare insurance plan covers your family then you will have alleviated the costs somewhat but you will have to factor in those medical and dental expenses that you will have to pay out-of-pocket. Prescription drugs, medical supplies, and other possible medical needs of your children that are not covered by insurance are also going to increase your expenses.

4. Childcare and Education. If both you and your spouse work, you are going to have to factor in the cost of baby sitters and day care. Costs can vary depending on where you live. As the child grows, you also need to spend for elementary and high school tuition fees and school supplies.

5. Clothing. Diapers are just the start. Shirts, pants, dresses, coats, and shoes that will have to be augmented as the children grow and the seasons change are also real expenses that parents have to be ready for. Though minimal, related expenses like repair and dry cleaning will also have to be paid for.

6. Transportation. Car payments and expenses for maintenance and repair will have to be factored in here. When you have children, you’ll realize that you will have to be making more trips—and thus spend more for gas—to the school, to camp, to their doctor’s appointments.

7. Miscellaneous. Items that do not fit in any of the above categories such as those for their personal care and entertainment are classified here. These include storybooks, toys, gadgets, clips, hairbrushes, computers, and others.

According to the USDA 2011 report on Expenditures on Children by Families, housing comprises the biggest expenditure of a child from birth to 17 years old. This is followed by childcare and education, food, transportation, healthcare, and clothing. The USDA also found that childrearing expenses were highest in the urban areas in the Northeast, West, and Midwest.

The urban South and rural areas had exhibited the lowest childrearing expenses.

In case you’re new to parenting, it’s also important to understand that childcare costs are directly proportional to age.  You can expect your expenses to go up as your child grows older. They consume more food, they are going to want new stuff, and their school needs are going to increase as they go up the educational ladder.

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The Elements of a Grant Application Submission

One of the important things that you should keep in mind in your quest to get funding is that the various grant sources require that you follow certain formats when submitting your grant application to them. How much information to provide and when to provide them really depends on the requirements of the grant maker. The best way to find out what these are is to study the website of your prospective funding source. They will usually outline their requirements and application format there. If you can’t find that information in their website, give them a call or email them so you can get it.

If you’re trying to get funding from Uncle Sam, there are common elements in the application package that they require applicants to submit. Of course, each agency has different requirements so you should be careful to tailor-fit your application accordingly. These common elements include a cover letter, certification forms, assurances forms, and budget narratives. You will also be required to attach certain documents such as the resumes of the people in your organization, among others.

As far as private sector funding sources are concerned, they usually require an initial letter of inquiry before considering your proposal. A letter of inquiry is just a short letter where you basically ask the potential grantor if they would be interested to fund your project. Many organizations require only this for the initial contact since they are usually inundated with unsolicited proposals that take a lot of their time to review.

Only after they have responded to your inquiry will the organization then require you to submit a cover letter together with the grant application form. Many private funders use the Common Grant Application form developed by the National Network of Grantmakers. Like federal agencies, they will also require mandatory attachments.

When submitting your grant application package to a prospective funder, be sure to review the criteria first. Be sure to write and format your request so that it complies with the guidelines set forth by the grant maker. Follow the format to the letter, including pagination, the order of information, and the documents that you need to attach. For federal grants, applications will be evaluated based on a point system where the maximum score is 100 points. By following the criteria carefully, you increase your chances of being awarded the grant.

For private organizations, be sure to ask first if they use the Common Grant Application form or have another format. They also have their own evaluation criteria and you increase your chances of getting the award if you customize your application to their requirements.

Many organizations have now also harnessed the power of the Internet to streamline the grant application process. Many of them now require applicants to fill out their applications online. Called e-grants, the format is basically similar to traditional paper applications but the difference is that you have to put the information in their online form, always keeping a close watch on the limitations on the number of words, the boxes that need to be checked, and the other technical requirements.

Before you submit your final request, be sure to proofread it for errors and ensure that you have all the documents required in the package.

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Types of Grants

There are different types of grants that fit the project you are interested in seeking funding for. Knowing what these types are will help you apply for the one where you’ll have better chances of getting the award. Here are the most common types of grants:

• Annual Campaigns. These are grants that give support for an organization’s operating expenses, expansion, and improvement. For budget line-items like salaries, benefits, equipment, and other expenses that support operations, a grant for general/operating expenses may also be applied for.

• Building/Renovation Funds. If you need funds to build a new office or facility or seek to renovate an existing one, these are the types of grants to apply for. However, there are only a limited number of these types of grants awarded. A similar type of grant which gives not only money for construction and buildings but for equipment and endowments is the capital support fund.

• Challenge Monies. These are grants which are given by some organizations only after you have secured other funding sources (except government grants). A similar type of grant is that of matching funds where the award is only given when you are able to match it with your own funds or in-kind contributions.

• Conference/Seminar Grants. These are grants that pay for all the expenses (speakers, travel expenses, meals, etc.) associated with planning, joining, or hosting a conference or seminar.

• Endowments. These are grants given to a nonprofit organization which aims to develop and sustain its long-term viability. An endowment fund gives permanent investment income to the organization so it can continue to finance its operations.

• Fellowships. These are awarded to support the study and research of graduate and postgraduate students in the fields that they want to pursue. Students awarded portable fellowships can study at an institution of their choice while institutional fellowships are given by a university or institution of higher learning for the grantee to study there.

• Research. These are grants that are given to institutions that employ grantees. The aim is usually to further medical and educational research.

• Scholarship Funds. Awarded to students at the undergraduate or graduate levels to fund their studies. Scholarship usually pays for tuition, miscellaneous, and other related expenses like books and living expenses.

• Seed Money. These are grants that get programs started. The organization still has to find other sources of funding to enable the program to expand. Pilot programs can apply for program development grants to develop new programs and grow their organization.

• Technical/Consulting Assistance. These are grants given to organizations to enable them to hire a firm or an individual who can give them technical assistance to improve their program.

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