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Crash budgeting can help fix a bad financial situation

By Mary Hightower
U of A System Division of Agriculture
March 25, 2016 

Fast facts:

  • About 40 percent of consumers have trouble making ends meet some months
  • "Crash budgeting" can help bring spending back into the black

 (436 words)

LITTLE ROCK – About 40 percent of consumers have trouble making ends meet some months, but a “crash budget” can help get finances back on track, said Laura Hendrix, an extension personal finance expert for the University of Arkansas System Division of Agriculture. 

“That’s a troubling statistic from the Financial Industry Regulatory Authority – that so many consumers have trouble on a month-to-month basis,” Hendrix said. “However, a crash budget can help those consumers eliminate all unnecessary spending for a short time to help get back in black.” 

She offers five quick tips for crash budgeting:

  1. Eliminate “bad habits” spending. “Soft drinks, junk food, fast food, alcohol, cigarettes -- anything that’s not good for you can be eliminated from your spending plan,” she said “As an added bonus – you’ll not only save money but you’ll also improve your health.”
  2. Brown bag it.  “Pack lunch at home for $1-2 instead of spending $8-10 eating out for lunch,” Hendrix said. “Cook dinner at home too. Brush up your culinary skills.  Enjoy nutritious, home-cooked meals instead of dining out.”
  3. Plug utility leaks. “It’s easy to cut utility costs. Adjust your thermostat by 10-15 degrees so you’re not heating or cooling the house when no one’s home,” she said. “Install weather stripping around doors. Close curtains in the summer, open them in the winter.” Other ideas include unplugging chargers when not in use, turning down the water heater to the lowest setting that still provides enough hot water for your shower, taking shorter showers and running the dishwasher only when it’s full.
  4. Shop second-hand. “Try to eliminate purchasing new items during your crash budget,” Hendrix said. “If there’s something you must have, look at thrift stores, consignment shops, and garage sales for the lowest costs.”
  5. Focus on needs, not wants. “Needs are those things that are necessary for survival – food and shelter,” she said. “This also includes transportation to the job that earns the paycheck to pay for food and shelter.” Hendrix said that much of consumer spending goes to “wants,” not “needs.” Identify and eliminate unnecessary expenses.  Look for low-cost or no-cost alternatives.

“Entertainment spending is a great example,” she said.  “Rent a DVD instead of going to the movie theater or borrow a movie for free from your local library.  Look for free community events. Play board games at home. Visit local parks and recreation areas.” 

The Cooperative Extension Service is your source for reliable, research-based information to improve quality of life. Discover the latest recommendations for creating a spending plan, managing credit, building your savings and investing for the future. Learn more at www.uaex.uada.edu/life-skills-wellness/personal-finance. 

 

Pursuant to 7 CFR § 15.3, the University of Arkansas System Division of Agriculture offers all its Extension and Research programs and services (including employment) without regard to race, color, sex, national origin, religion, age, disability, marital or veteran status, genetic information, sexual preference, pregnancy or any other legally protected status, and is an equal opportunity institution.

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Media Contact: Mary Hightower
Dir. of Communication Services
U of A Division of Agriculture
Cooperative Extension Service
(501) 671-2126
mhightower@uada.edu

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