Whether you’re getting out of debt or saving for a down payment on a house, chances are you are not where you want to be financially if you’re reading this.
You can change your finances through a number of ways – one of them being cutting expenses (the other being increasing your income). I know this because I am working my way out of massive student loan debt through cutting my expenses (I just moved to a less expensive apartment, for example) and increasing my income (by freelance writing and blogging alongside my full-time job).
One of the easiest ways to cut back on your expenses is to find ways to save on things where you’re wasting money without realizing it. By making small changes, you can save big time – and with saving big time comes reaching those financial goals!! ☺
I know that the feeling of having more financial margin and not living paycheck to paycheck is so powerful. So, try these tips if you’re not there yet.
Cable is expensive and it’s completely unnecessary. You may like and enjoy your shows, but you don’t actually need them to survive.
Solution: Consider getting rid of cable if you want to save money. I haven’t had cable in years, and I don’t miss it at all. When I’m somewhere that has cable and get a chance to watch it, I love it (admittedly!). But then I go home and never think about it again. I would bet that you’re not going to miss out on cable as much as you think if you cut it out.
Solution: Because most people don’t use extended warranties, and because they’re usually expensive, if you are aiming to cut expenses, then skip the extended warranty. Just be extra careful with your nice stuff! ☺
Drinks are a really easy way to throw away money that you otherwise could save. Bottled water, soda, and alcohol are three drink types that you do not need to survive (assuming everyone reading this has access to healthy, clean water!).
Solution: Cut out buying drinks when you go out to the grocery store and to restaurants. You will save money (especially on bottled water and alcohol). Even when you spend money on soda or other drinks, it adds up. Obviously, $2 is not going to make you rich, but if you cut out all drink spending, you may be surprised to find how much you can cut back on your expenses.
4. Where You Shop
Regular grocery stores are expensive compared to discount grocery stores. The problem is that this isn’t obvious without price shopping. I know this because I used to shop at Giant Eagle. Once I started cutting expenses, I quickly realized that I could save a lot of money on groceries by shopping at Kroger, Aldi, or Marc’s.
Solution: Change where you do your grocery shopping. Consider a less expensive store and simply save money by going somewhere else (no coupons required)!
5. Plugged In
You may not realize it, but everything that you have plugged in costs you money (whether it’s turned on or not). With so much technology in our homes, it’s easy to forget that all the items that are plugged in will actually raise your electric bill.
Solution: Make an effort to unplug as many electronics as you can, especially big-ticket items (especially when you leave your house).
6. Banking fees
Any time you pay a banking fee, you are throwing away money. This applies to ATM fees, account fees (overdraft or regular), or investment fund fees that are really high.
Solution: Plan ahead! If you’re going out (or on a trip), bring cash to avoid ATM fees. Make sure you always have enough money in your checking account to cover your expenses so you don’t incur overdraft fees. And pay very close attention to the fees that you’re charged in any of your investment accounts (including your retirement accounts).
7. Credit Card Interest
Not paying off your credit card every month is one of the fastest ways to get into debt and lose money. This is because credit cards typically have a high interest rate that compounds over time. So, if you pay the minimum balance on your credit card, you are throwing money away.
Solution: Always pay off your credit card in full every month, or better yet, don’t use one at all if you can’t follow this rule (I’ve never had a credit card for this very reason)!
A Final Note!
The key to cutting your expenses is remembering that your financial goals are a high priority. With every step listed above, ask yourself whether the expense is more important than your financial goal.
You may actually want cable and want to buy drinks when you go out. There’s nothing wrong with that in and of itself. But if you need more money at the end of the month, then you may need to prioritize your financial health above these other expenses until you’re in better financial shape.
Next Up: Read The Ultimate Guide to Frugal Living.