How to Control Your Spending

   

Americans carry a collective total of roughly $850 billion in credit card debt, and among households that have credit card debt, the average is nearly $16,000 per household, according to the Federal Reserve. Many people find themselves resorting to using credit cards to pay medical bills and, although it’s not ideal, it is often the only thing preventing bankruptcy, especially for seniors.

Those who don’t cover medical bills with credit cards often use them just to make ends meet in this “new” economy we’ve been experiencing since 2008. Still, others are victims of their own undisciplined shopping habits.  

[More from Manilla.com: How to Live on a Budget]

If you fall into the third category, you’re in the most fortunate of the three groups because you have the power to reduce your debt and manage your money better simply by rethinking your discretionary spending. Here are five ways to control spending.

Analyze need versus want.

If you aren’t able to be clear on a need versus a want, I guarantee you struggle with your finances. When you’re about to pick up that neat / cute / fabulous / useful new THING or sign up for a new service you’ll pay for monthly, stop and think. Is it something you need or just something you want? It is a desperate must-have or a nice-to-have? Becoming ruthless about where you spend your hard-earned money is the first step to taking control of your personal finances. 

[More from Manilla.com: Ways to Stop Living Paycheck to Paycheck]

Think of money as time.If you tend to spend in a cavalier fashion, try thinking not of how much money the item costs, but instead calculate how much of your life it will take to earn the money to buy it. If you want a new pair of jeans that cost $75, figure out how long it takes you to earn $75 in take-home pay (not gross pay). If you had to work those hours in exchange for the jeans right now, would they be worth the time? If not, pass on the purchase. By thinking about buying with your time rather than your money,  you shift your perspective, which may help clarify your priorities.

Think about storage and maintenance.

Every single thing you own costs you something in the currency of storage space and maintenance, even if it’s just dusting it or putting it away when you’re finished with it. Before you leap into a new purchase, consider whether you have room to store it, where you’ll keep it and how much ongoing attention it will require. It may not be so attractive once you add in all those factors.

[More from Manilla.com: Live Rich By Spending Less]

Assess whether it’s redundant.

The worst purchase is a wasted one. Disorganized people tend to spend money over and over again on the same things because they typically can’t find what they know they own, so they buy it again. Before you purchase anything, ask yourself if you have anything else that will perform the same purpose equally well or better. Or better yet, if you already know you have the same item at home but can’t find it, let that be your motivation to declutter so you can find it, and save the money.

Sleep on it.

So let’s say you’re in love with a new sofa that costs $1,200. You really NEED a new sofa because your pets have shredded the one you have and it’s 12 years old anyway. You’re just fine with the concept of exchanging 12 hours of your work life to earn the money to buy it. You’ll certainly have a spot for it once the old sofa is gone, and of course it won’t be a redundant purchase. Now what? If you love it, and you know it will be there tomorrow, leave it behind and sleep on it. (Not the actual sofa… just the decision.) If in the next few days you find yourself wishing you had brought that sofa home, that’s a clue that you won’t regret the purchase, so go back and buy it.

7 Tips for Late Starters on Saving for Retirement

                

Maybe you have refused to believe for the past 20 or so years that you’re getting older. Maybe you just haven’t had the funds.

Whatever reason it is, if you’re past 40 and you haven’t started saving for retirement yet, you need to start now.

[More from Manilla.com: Saving for Retirement: How and When To Start]

But you still have options, so don’t worry too much yet. Here are seven tips to help (and most of them don’t even involve payments into IRAs or 401Ks).

1. Contribute as much as possible. If you’re 50 years or older, the Internal Revenue Service lets you put away thousands of extra dollars a year towards your retirement savings. In 2012, the department allowed late-savers to contribute up to $22,000 to a 401K, which is $5,500 more than young workers. Check each year to find out the exact limits.

2. Invest to earn more. Even if retirement is 10 to 20 years away, you should take some risks with your savings. Investing some of your retirement funds in stocks or mutual funds will help your savings grow and will likely make up for some lost time.

[More from Manilla.com: 5 Financial Disasters to Avoid]

3. Delay retirement. If you continue to work for a few more years, even just one or two, you could save thousands of extra dollars towards retirement. You also may want to consider holding a part-time job during the early years of your retirement to keep a steady flow of funds coming into your accounts. You could designate that your part-time salary goes solely toward future retirement spending.

4. Wait to start Social Security. Each year you hold off from starting to receive your Social Security benefit from age 62 to 70, your monthly check increases. For example, at age 62, you earn $750 a month, while if you start at age 70, you get $1,320 a month. If you can hold off, it will pay off in the long run.

5. Pay off debts. Although you may think paying the minimum on your credit card debt is a financially sound, it will kill you with interest. And the more interest you accrue on debt, the less you will have to save toward retirement. Pay off your debts as soon as possible to stop increasing your overall expenses and start putting more away for your future.

[More from Manilla.com: Refine Your Lifestyle]

6. Eliminate unnecessary insurance. The more costs you cut, the more you will have to save for retirement. And while your situation may not be dire yet, you need to start saving as much as possible right away. The federal government recommends that you consider decreasing big monthly payments like car insurance. Specifically, consider dropping collision coverage on an older car or increasing your deductible if it is currently at a low rate, such as $250.

7. Downsize. These may not be the words you were looking to hear, but it is a good fallback option. If your children are out of the house, keep in mind you are paying extra in heating and air conditioning costs, as well as extra square footage that you don’t need anymore. If you downsize, you will be able to cut mortgage payments and put the extra money in your pocket toward vacations or save it in an emergency health care fund.

Financial education for kids - Warren Buffett

To commemorate Financial Literacy month, Yahoo! Finance is proud to bring you a Q&A about financial education for kids with famed investor Warren Buffett. 

One of the world's richest men, Buffett is also the voice of a new animated series entitled "Secret Millionaires Club," which offers kids tips on investing and basic business concepts. "The more you learn, the more you’ll earn,” Buffett says in the series, which also features the voices of Jay-Z and Shaquille O’Neal. The first DVD of the series was recently released and is available for purchase on Amazon.com. More information can be found at www.smckids.com.

In addition to the Q&A below, we invite you to check out our newly refreshed Financial Education hub: Money 101. 

Every day Yahoo! Finance helps you make financial decisions with confidence and we also want to be your one-stop shop for financial education. 

As always, you’re feedback is welcomed: Let us know what you think.

— Aaron Task, Editor-in-Chief, Yahoo! Finance

Yahoo! Finance: How did you get involved in the Secret Millionaires Club?

Warren Buffett: My friend Andy Heyward, who is a producer of kids entertainment, and I came up with the idea to help educate kids about financial matters. I thought the idea of using the power of cartoon characters to carry a message was a good one, as is  teaching financial lessons at an age when it can help them.
 
Courtesy of Gaiam Vivendi EntertainmentYF: What does the term "Secret Millionaires Club" refer to?

WB: In the pilot episode, a group of kids come together to save their local youth center. In the process, they come across a valuable baseball card which they sell to save their youth center. They ask my help to help them understand and manage their money. In the process we form the Secret Millionaires Club, and have lots of fun adventures together learning about money and business.
 
YF: Is the goal to help kids understand finance and related concepts — or to help them learn how to amass wealth? Or both?

WB: The goal has nothing to do with amassing wealth, and everything to do with helping kids understand money, and develop healthy habits from a young age. Someone once said, “the chains of habit are too light to be felt until they’re too heavy to broken.” We’re trying to help kids develop healthy habits that will help them their whole life.  
 
YF: What are some of the key financial terms and business concepts you hope kids learn from the series? How did you learn them?

WB: Some of the lessons you’ll hear in this series are: “The best investment you can make, is an investment in yourself.” “The more you learn, the more you’ll earn.” “Learn from your mistakes, and the mistakes of others.” “Great partnerships make any job easier.” “Fail to plan, plan to fail.” “With business as in life, get to know people before you judge them.” “It’s not just the outside that counts, it’s the whole package."
 
YF: Is there anything you can share about how you taught your children about business and finance that other parents might adopt?

WB: All the lessons in Secret Millionaires Club are lessons I taught my own children. We produced this series to try and teach other kids, and in some cases, their parents! They are simple lessons that can help you in business and in life, no matter what age you are.

YF: What is the #1 thing parents should teach their kids about money — and #1 thing they should NOT teach them?

WB: Secret Millionaires Club has lots of good lessons about money such as learning not to spend more than you have, and saving for the unexpected, and not borrowing money unless you have a plan to pay it back. The series shows the consequences that can happen if people don’t make wise decisions. We’re trying to help kids develop good decision-making skills from a young age to avoid some of these pitfalls.
 
YF: Is the series aimed at kids specifically or is it designed for kids and parents to watch together?

WB: We created Secret Millionaires Club for kids, knowing it would also help parents. And it has. It provides stories that kids can relate to which help them understand different situations in business and in life, and hopefully help them develop the skills to make good decisions their whole life.
 
YF: Why do you think financial education is so important for kids?

WB: So many adults get into financial trouble, in business and in their personal lives, because of bad decisions. We hope to influence kids at an early age so they learn to think about their actions, and the consequences of making bad decisions. It doesn’t just influence success in business, it influences your family life as well. We want to help guide kids toward leading more productive lives.
 
YF: Have you reached out to the DOE or other government agency to discuss building a curriculum for financial education in the public schools?

WB: We already have a program that is in thousands of schools and youth organizations. Every year, we have a contest called the “Learn and Earn” challenge. Thousands of kids use what they learn in Secret Millionaires Club episodes to come up with their own business ideas. The finalists come to see me in Omaha and present their business plans, showing what they have learned from Secret Millionaires Club. It’s a lot of fun for the kids, their teachers, parents, and most of all for me! It shows that at a very early age, kids not only understand financial matters, they come up with some pretty terrific business ideas themselves!
  
YF: What's an appropriate age to start teaching kids about money?

WB: It’s never too early. Whether it’s teaching kids the value of a dollar, the difference between needs and wants, or the value of saving. These are all concepts that kids encounter at a very early age, so best to help them to understand it.