Gain Control of Your Spending to Improve Your Finances
No one wants to pay more than they need to, whether it is for housing, groceries, or utilities. Keeping your expenses down is a great way to build your savings, strengthen your financial picture, and even reduce stress. Understanding the importance of lowering your expenses is one thing, making smart choices that don't leave you feeling like a martyr is another. Balancing the two allows you to stay on track sustainably.
Use a Dieter's Mindset
People who successfully lose weight understand that you need to think of eating and exercise as a journey, not something you do to lose weight and then cease to worry about. Failing to create a diet and exercise plan you can live with will not be sustainable, and you will find yourself binging, or even giving up entirely. Take that same approach to money management. Sure, you can strip your budget down to the bare bones. Cut out all restaurants, grocery store treats, and streaming services. How long will that last? The problem with cutting your expenses down so significantly is that your lifestyle will follow along. It can be a challenge to head out to work every day without the idea that there is some pay-off. What generally ends up happening is, much like with dieting, at a certain point you give up, blow up your budget, overspend, and decide it is all too much work.
Look at Expenses You Assumed Were Fixed
When budgeting many people don't even look at ways to lower their fixed expenses. There are ways that you can lower some of these expenses, and it only takes a little time and effort. Contact your utility company. While they are not going to offer you a lower rate, they probably have a leveling plan that allows you to pay the same amount each month, regardless of your actual usage. This can be a great help when budgeting. Refinancing your various student debt balances into one private education loan allows you to carry a loan with a lower interest rate than you qualified for in college. You can also extend the payment terms to lower your monthly expense. If you are a homeowner, refinancing your mortgage at a lower interest rate will lower your monthly payments. There are fees associated with refinancing mortgages, so you want to do the math to check that it makes financial sense.
Make Changes You Can Live With
The key is to make changes that you can live with. Keep a spending diary for a month. Jot down every penny you spend, including bills, subscription services, meals out, and quick trips to the dollar store. At the end of the month, look at what you have spent. You will probably see some things that you didn't need or enjoy, and wouldn't miss at all. Maybe pause your skincare subscription box and use up all the samples you have accumulated. Perhaps the gym membership isn't worthwhile since you can see that you only went two times in the previous month. The key is to look for areas to make cuts that you won't miss. Only after you have made these cuts should you look at more strict measures. The tough part of making these cuts will be canceling auto-renewals and subscription services. If you are honest with yourself, you may admit that the hassle of this is what kept you subscribed for as long as you have. Companies count on that, so don't feel like you are alone. Dedicate a morning to canceling any service or product you don't use.