Ideas for reducing monthly expenses
Understanding personal finance is critically important. Otherwise, you’re left playing catch up or end up in a financial hole.
A common issue facing people today is an ever-growing list of monthly expenses. These can range from fixed costs to discretionary expenditures. As living expenses increase, people are forced to take a step back and reevaluate things.
We can go on about how to reduce costs, but there’s one way everyone can help identify and lower monthly expenses.
That’s creating a budget.
Now, the act of creating a budget alone won’t lower your monthly costs or expenditures. If it were that easy we’d all be doing that and be on our way.
First, you need to gather all your living expenses and fixed costs (i.e. rent, insurance). You will also need your total monthly income, which for many of you is your bi-weekly paycheck. Also include any steady income you might be earning on the side.
Once completed, list out all your necessary expenses such as utilities and insurance into one category. The second category will be your non-essential items such as entertainment, eating out, etc.
From here, you’ll begin looking at your fixed costs and finding ways to reduce those. A popular place to begin is insurance, especially auto insurance. Call up your insurance provider and ask about lowering your rate. If they say no, shop around and see if you can find savings elsewhere.
Other ways to decrease the fixed expenses might be trading in your car to remove the monthly payment or moving into a cheaper home or apartment.
The next category in your budget is where you can really identify unnecessary expenses. Look at the line items that contain eating out, entertainment, or other needless costs. Easiest way to reduce the expense would be to eliminate it together, but that’s somewhat impractical.
Instead, begin lowering the number of times you eat out. Stop going to the bars or movies each weekend. You might start replacing those with working out, going on walks, enjoying nature, or other cost-effective activities.
It’s still important to live a little and enjoy life. However, by lowering your expenses while you move closer to financial health, you’ll reduce stress and be more effective in reaching your financial goals.
If you find yourself struggling to lower your expenses after building out your budget, get yourself an accountability partner. Ensure this person will hold you accountable for your goals and keep you on the right path. This can be a trusted friend, family member, or even someone through the Internet.
Building a budget is an excellent way to look through your current expenses and begin finding those you can reduce or eliminate together. Identifying your pain points can take your financial health to the next level.
If you want to keep certain things, look at substituting cost-effective alternatives.
At the end of the day, it all begins and ends with you. But building your own budget is a great way to begin.