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5 Smart Spending Strategies for a Tough Economy

When a tough economy is making it hard to make ends meet, it may be time to rework your household budget. Spending less isn't always feasible, so you need to make better choices about what you spend your money on and identify your priorities. Reorganizing your budget can help you get a better handle on your current cost of living and also provide some valuable information about your savings potential. You can only scale back on expenses when you know what you're actually spending money on. During tough economic times, keeping track of your daily purchases can help you spend smarter.

Here are five smart spending strategies when enduring a tough economy:

1. Seek out membership deals. Whether you're shopping for groceries, making a trip to the spa on a regular basis, or planning on traveling a few times over the year, look for membership pricing options to save money. Find a warehouse club that stocks your favorite brands so you can buy in bulk. Most offer one-day trial memberships so you can scope out the inventory and decide which membership plan will be the best fit for you. Talk to your local spa or salon about membership options so you can pay a discounted fee for services over the course of the year. Sign up for members-only travel deal sites (most are free) so you can take advantage of discounted travel packages and other travel deals. Remember that memberships are only valuable when the cost of the membership is justified by the amount of discounts you receive. If you're not a frequent shopper or buyer, you probably won't maximize your membership benefits.

2. Overestimate expenses. When you're putting together a monthly budget, you'll be better off overestimating how much your groceries, electric, and other variable expenses will be. This approach can actually reduce some stress about money because you won't feel chained to a low number. Overestimate variable costs by 10 to 20 percent. Report your actual expense for that item in a separate column and figure out how much you ended up saving that month. Any extra funds can be put right into your savings account for that month.

3. Buy used. If you're in the market for a new car, a new computer, or just need some new furniture within the next couple of months, seek out used merchandise available in your local area to save on costs. Buying new could put a big dent in your budget and wipe out most of your savings. Play it safe by purchasing used items if you absolutely need to make the purchase right now. Shop at garage sales, check out Craigslist, or scope out the Facebook Marketplace to see if any Facebook friends are selling anything you need. If you can hold off on the purchase for about six months, find a way to save up money for a new purchase instead.

4. Stick with your budget. Get into the habit of reviewing your budget regularly so you aren't making frivolous purchases. Take a good look at the numbers so you know how much you are able to spend on certain items each week. Whether you're buying groceries, gas, new clothes, or eating out, make sure you know what your spending range is for that week so you aren't over your budget by the end of the month. You might not be able to cut out or reduce these expenses significantly, but you will be able to set some caps or limits on these expenses to make your budget work.

5. Create a new wants-versus-needs list. You might have had plans to take a long vacation, host a big party, or renovate your home before the economy took a nosedive, but can't justify making those bigger purchases as money gets tight. Draft a new "wants" versus "needs" list so you can prioritize your larger expenses and set yourself up to meet your savings goals to cover them. Avoid the temptation to satisfy these "needs" by charging the purchase on a credit card or by taking out a personal loan. One of the worst money moves you can make during a tough economy is to add to your debt load. Prioritize your expenses now, so you can pay only with cash and identify your actual needs versus wants.

Sabah Karimi is a featured Yahoo contributor and a writer for top financial blog Wise Bread.



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