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Money/Finance

Three tips to weather the economy

While there's nothing new about the country's economy being in a downward spiral, there is growing talk that "the resulting rise in prices likely reflects a long-term trend," reported the Washington Post as recently as April 4, 2011.

So what's the best way to hedge against volatility that might run longer than initially expected? You may not like the answer because its concept is nothing new, but it's a surefire prevention nevertheless: a budget.

Yes, two little words that a lot of people dread in concept, but since the same Washington Post article forecasts prices "rising faster than Americans' incomes for some time to come," there seems little alternative but to revisit a tried and true safeguard.

Following are three tips to help consumers take control of their personal budgets in simple ways that can help block against the uncertainty of continued inflation:

* Reduce spending by 15 percent. Yes, that sounds like a painful one to start out with, but it's not that hard to initiate - plus, you'll start seeing its rewards instantly. The fastest way to get started is to automatically transfer 15 percent of your weekly net paycheck into a savings account and then adjust your spending to fall within the remaining amount.

There will still be money in your savings account for emergency access as you perfect your new spending guidelines, but once you see this amount increase in value each week, you'll be surprised at how incentivized you'll become to shop smarter. Even if you're already saving a certain amount each pay period, try to increase it to reach 15 percent to allow an added safeguard against inflation.

If you absolutely cannot shave 15 percent off your spending, consider some alternate ways to reduce your monthly expenses.

* Inquire about balanced payment plans. Certain household expenses fluctuate on a monthly or seasonal basis, which can make it hard to forecast, let alone adhere to, a personal budget. Instead, inquire about average (or balanced) payment options from utility and service providers. As another option, if you live in a state where electricity is deregulated, shop for better energy rates. Let's say you live in Texas; through sites such as ShopElectrictyRatesTexas you'll be able to compare rates from local providers. Sites such as this exist for most areas, and by researching them you'll be better prepared to plan an annual budget that is protected from seasonality or other unexpected variables.

While some services don't offer balanced payments, you can determine your own monthly average based on your previous annual billings divided by 12. Then remit this amount every month -- even on months when a lesser amount appears as a minimum payment. Now, you have created your own balanced payment and gained control of your finances instead of leaving them to be determined by outside factors.

* Start at home. If you're not able to sacrifice 15 percent off your spending (and trust us, you are not alone), why not make some immediate changes at home to realize savings in different ways? For example, start using compact fluorescent light bulbs that can reduce your energy usage by up to 80 percent. That's instant savings. Also consider things like eliminating your landline. Surprisingly, many "bundles" of cable, landline and Internet services that some providers sell are more costly than ditching the land line in its entirety and contracting the other two services separately.

Remember that most companies provide adequate information for you to make an informed decision with just a little research, as is the case when looking at sites like www.shopelectrictyratestexas.com mentioned above.

There have been countless guidelines written about budgets and how to save money. But rather than get caught up in endless record-keeping and coupon-clipping rituals, these three simple tips are bound to get you on your way. It's a tough world out there - why not start simple?

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