by Mercedus Long

Created on: April 30, 2010   Last Updated: June 06, 2010

In times of plenty the majority of people were happily spending their way to bankruptcy, even if they were not aware of it. It was not uncommon to see a household with three drivers and everyone had their own car. Or those who purchased a house in hindsight they really could not afford. Now that the economy has turned these same people are struggling to find ways to cut expenses and reduce their losses. How can we try to manage our finances responsibly and cure our love of overspending?

The first advice many financial planners would give any individual looking to control their finances is to create a personal or family budget. A properly planned budget is essential to developing fiscal responsibility. It is important to establish what your needs are and what you would like to spend on your wants. Needs encompass things such as groceries, rent/mortgage payments and other monthly expenses. Movie tickets and soccer practice are wants, you can live without them.

When we ask ourselves about the expenses inside our budgets, we always seem to consider the easiest questions first. Unfortunatley, there are some small expenses that are hurting us and we may not even be aware of them. These seeminly small charges can add up and nickle and dime money away from your budget.

According to 9th Edition of Personal Finance (Kapoor,Dlabay,Hughes 2009) the most popular ways to pay are cash, check, credit cards and automatic teller machines(ATM). However, each comes with its own set of problems. For example many people discover that carrying cash does not allow them to really evaluate how much they are spending. You know the expression about money burning a hole in your pocket, don't you? Also paying by plastic may lead some to splurge on high priced items without thinking about the fees or penalties they will incur if they do not make the payments.

One key way to manage your finances responsibly is to look at the fees for certain accounts or services that you may be using. If you visit an ATM twice a week at the average charge of $2 per transaction, you are wasting a minimum of $208 a year.

$4* 52 (weeks in a year)=$208

In a high yield savings account that $208 with an interest rate of 1.10% comes to $476.00 (475.904 rounded up to the nearest tenth). The interest rate is current as of April 2010 for an ING savings account.

This simple calculation shows how you could be bleeding money from your budget without even knowing it. This expense can be minimized by using your own

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