Review Current Monthly Spending
The first step in reducing your expenses is to figure out how you spend your money each month. Even if you have a budget, it can be helpful to get granular and list out your recurring monthly expenses in detail. Going into specifics can give you deeper insight into the areas where spending can be eliminated or reduced. For example, if your budget typically looks like this:
- Groceries - $250
- Subscriptions - $85
- Entertainment - $185
You can break down your spending in these categories in much more detail to get a better idea of where your money is spent:
- Entire Foods - $150
- Fox Foods Grocery - $60
- Bodega Grocery - $40
- Movies - $40
- Sporting events - $60
- Concerts - $40
- Books - $25
- TV/Movie streaming - $45
- Gym memberships - $40
Obviously, there is even more detail you can go into, like specific streaming expenses, but even this amount of information gives a better idea of where you can trim back on spending. For even more tips, read on for five easy steps that can help you cut down on spending without dramatically changing your life or budget.
1. Review Subscriptions
Take a look at the active subscriptions you have and consider how often you use them. By no means should you cancel every streaming service you use in the name of cutting costs, but choosing the few that you use most often and canceling others is an easy way to save money every month.
Almost everyone has services that they signed up for and no longer use, so make sure you have stopped paying for any services that fit that description. There are apps designed to help with this task, but be aware that the apps themselves can cost a monthly fee.
2. Consolidate Debt
Consolidating all or a large portion of your debt in a low-interest personal loan can be a great way to reduce your overall monthly expenditures. These types of loans are amortized over a longer period of time — often 10 to 15 years — so your payment is usually much lower than paying against individual debts every month. As an added bonus, consolidating your debt means you only have one payment to make each month, so there’s a much lower risk of accidentally missing a payment.
Not sure if debt consolidation is right for you? Check out DCU’s debt consolidation calculator to help you decide.
3. Shop for Better Rates
Services like internet access, your cell phone, and home and auto insurance are important for almost everyone, so cutting those expenses out isn’t the best option. However, look around for promotional rates or other service options that may cost less than what you’re currently paying. Some providers offer deals for people who switch from competitors or deals throughout the year. Occasionally checking for lower-cost alternatives can end up saving you a good amount of money every month.
4. Reduce Food Costs
Cutting down your food expenses doesn’t mean you should cut down on eating or go down to a strict diet of eating only the cheapest food you can find. Instead, lowering your food costs could look like shopping at lower-cost grocery stores, buying more generic brands, only shopping with a list (and sticking to that list), limiting the amount of time you eat out at restaurants, spending less on non-necessities like alcohol, or meal planning and prepping.
5. Cut Down on Unnecessary Shopping
There’s nothing quite like the feeling you get from clicking Buy Now and knowing a treat will soon be arriving at your door. These sorts of purchases often aren’t budgeted for, so it can be hard to track the amount of money spent on impulse buys. No one is perfect, but maintaining spending discipline while scrolling through your phone is key to keeping the extra room in your budget from disappearing after a few purchases. One way to keep this spending in check is to remove any saved credit or debit cards from your phone or computer — needing to manually input your information can act as a good deterrent.
Need Help Getting Started?
Whether you want to set some money aside for an emergency fund, start saving for future purchases or get started on retirement, reducing your monthly expenses is vital to increase your saving power. But even if the above steps seem simple, it’s natural to need help along your expense-reducing journey. DCU offers budget coaching with its BALANCE program for those wanting to find the best way to reduce their monthly expenses. Get in touch today with any questions you may have, we’d be happy to help.
This article is for informational purposes only. It is not intended to serve as legal, financial, investment or tax advice or indicate that a specific DCU product or service is right for you. For specific advice about your unique circumstances, you may wish to consult a financial professional.
Federally insured by NCUA.
