Creating a budget is all well and good until you fly right past it. If you have a tight budget on your hands, it can be so easy to step over the line. One extra splurge or an unexpected bill and it’s game over. Not really — but we know how disheartening it can feel to not make a budget work. Which is why finding ways to cut your spending can take a lot of pressure off your budget and you.
We’re sharing our six favorite ways to spend less money, so you can stick to your budget and grow your savings in one fell swoop.
Most of us have a lot of bills each month. And many of us just pay them without questioning whether we can get a better deal. But here’s a big, money-saving tip: many of the businesses that you use would happily cut you a better deal.
Why? Because it costs a lot of money to get a good customer. Companies spend millions each year trying to win your business. They want to avoid losing you as a customer, even if that means making a little less from you each month. You can negotiate better rates with nearly every company you use for monthly services or subscriptions. Think — internet service, cell phone service, car insurance, rent, airline fees, and more. You can save a decent amount of money just by calling annually and asking if they can offer you a better rate because you’d hate to take your business elsewhere.
Even if you log on and try to cancel Hulu, Amazon Prime, Audible, and a lot of other services, they’ll offer a discount or a free month or two to keep you as a customer.
Because of that, it’s worth picking up the phone and negotiating a discount. Start with your internet company. Review your service (and cost) and then call to ask if they can make you a better offer. Explain to them that you’ve been a loyal customer and while you’re happy with their services, you’ve found better pricing with competitors. They may be able to help you find a lower cost plan or cut you a discount for a period of time. If not, no worries, you can choose to stick with your current offer.
There’s no harm in asking, is there?
A spending cleanse (or a no-spend month) is a way for you to reset your habits and make you more conscious of how you spend your money. During the cleanse, you eliminate some or all of your spending for a period of time. We know this doesn’t sound fun, but at least you don’t need to fast to make this cleanse work for you. Pass the fries please.
A common spending cleanse is a 30-day cleanse. For 30 days, people commit to not spending on anything other than necessities. So you can buy groceries, but how about grabbing lunch out with a friend? That’s a no-no. Yes, that includes the taco Tuesday and wine Wednesdays! We know, that’s a major bummer. But you’ll thank us in 30 days when you see those dollars adding up.
Once the cleanse is over you can add back the spending habits that you missed, but hopefully, you’ll realize that there were some areas where you were mindlessly spending. Those are the areas you want to cut out of your budget in the future.
Putting up spending barriers is one of the easiest tricks to stopping mindless spending. It’s so easy to “add to cart” or head into a store for just one thing, only to emerge with bags of new items.
Budgeting doesn’t mean you have to stop shopping and spending money. But you’ll want to figure out how to make the mindless spending stop.
Some spending barriers that might work for you:
These small spending barriers don’t make you stop spending money — that’s not the goal — but they do give you a minute to think twice about what you’re going to spend your money on.
To easily track your spending on an ongoing basis, there are plenty of apps that can do the heavy lifting for you.
If you just want to know where your money is going every month without having to sift through your bank and credit card statements, a tool like Mint can help you do that. If you’re sticking to a zero-based budget and you want a toll to help you fill in the categories and make sure you get to zero every month, look at YNAB (You Need a Budget).
Other apps to look at include EveryDollar and PocketGuard.
However you plan to manage your budget, there’s an app to help you do it even better.
An app might be the high tech way to keep your budget in line, but if you want to manage your money old-school style, try the cash envelope method. It’s a great method, especially if parting with cold, hard cash is more challenging for you than swiping your credit card.
Here’s how the envelope method works. You separate your expenses between your fixed, required monthly expenses (like rent and healthcare), and your variable expenses. You’re going to use this method for your variable expenses only. Examples of these variable expenses include clothes, entertainment, household items, personal care products, etc.
For each of these variable expense categories, you’ll have a budget. For example, your budget may show that you can spend $100 on clothing, and $40 on health and beauty each month. You’ll make an envelope labeled with each spending category. At the beginning of each month, you’ll withdraw cash for each spending category and put it in the envelope.
Each time you make a purchase within a category, you pay for it with the cash from the related envelope. For example, if you get a pedicure for $30, you’ll take $30 cash out of the health and beauty envelope. You’ll then have $10 left for any other health and beauty related purchases for the month.
With this system there is no need to check your bank account before you buy something. You can check your envelope and if you have cash, go ahead! If not, you’ll have to pass or make a hard decision about borrowing cash from another envelope — which will in turn lessen your budget in that category.
Subscription services are a tricky business because it’s so easy to sign up for them and then you may promptly forget about that recurring charge that hits your bank account monthly. If you’re guilty of this, you’re not alone. According to one survey, 84% of people underestimated what they spent on subscription services monthly.
While there’s nothing wrong with paying for a subscription service that you use, it’s easy for them to add up and blow your budget. Are you really getting enough use out of that premium movie channel, music streaming service, and meditation app? Probably not. It’s time to give one — or all of them — the ax.
Now that you have your spending under control, why not learn how to leverage your savings? Enroll in Finance 101: Mastering Your Finances to learn more about budgeting, paying down debt, and investing!
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