5 Very Impactful Ways to Decrease your Spending to Improve Your Budget

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Decrease Your Spending to Turn your Deficit Into a Surplus Each Month

A budget that has a deficit each month leads to more and more debt and if not fixed, will lead to worse and worse financial health in the future.  There are 3 ways to flip around a budget and turn a deficit into a surplus and you now being on a path to financial freedom.

 

  1. Decrease Spending
  2. Increase Income
  3. Combination of both

In this post we will focus on Decreasing your spending as this is the action that can happen immediately.  Our next post will focus on Increasing your income which might take a bit more time which is why we will leave that for later.  We hope that after reading this you will jump to action and make one immediate change right now that will be one small step towards your goals and financial freedom.

 

Decrease Spending

If your serious about having better financial health and find your budget with a deficit each month you need to decrease your spending right away.  You need to pull out the goals that you created and set them next to your expenses so when you are deciding to keep something or cut it, you can revert back to the reasons why you chose to get in better financial shape.  To start, break down all of your expenses into two categories, Wants and Needs.

Wants:  These are all of the other expenses on your budget, things you don’t need but that you want.  This includes the money spent going out to dinner, movies, concerts etc.  The goal here is to be realistic and honest with yourself about what your willing to cut back on, not necessarily stop in order to achieve the goals that YOU DECLARED you are trying to obtain.

Needs:  These are things that are essential to your life such as mortgage/rent, a car, a cell phone (yes in todays world this is basically a need), your food budget, utilities.  Although we cannot eliminate any of these categories, we can find ways to spend less on them.

When making adjustments to your spending habits think about how you can make a few drastic changes that have large effects as opposed to trying to nickel and dime the entire budget.  For example, if you stop at Starbucks on the way to work each day (20 days) and spend $4.00 per day it will save you $80.00 a month.  This is great but if you make a single bigger sacrifice in categories such as Housing and Car payments it will have a much bigger effect.

 

5 Area’s to focus on when working to fix your budget

  1. Eating out

 

Until you get your budget in order you need to view eating out as a treat / reward if it’s something that you do somewhat regularly.  This is a Want that is easy to cut with a bit of will power and a focus on your goals.  If you go out once a week and spend $50.00 per night that is around $200 a month.  Use this as a reward and go out to eat on the last Friday of the month as a reward.  You will save around $125 each month by doing so.

  1. Save on Groceries

 

There are numerous discount grocers these days and if you haven’t shopped at them, you need to give them a try.  The average couple spends about $650 dollars per month on groceries.  One discount grocery chain, Aldi, has store brand goods that on average are 40% cheaper than national name brands.  Even if you only saved 25% by changing the stores you shop at and the brands you each you could be saving almost $165 dollars per month on groceries alone!!

 

  1. Downsize your car – and the payment

If you live in a suburban area, a car is essential and we can’t get rid of it completely but we can downsize the payment.  If you bought a car for $25,000 and have 4 more years of payments to make this can be a big area to save a lot of money by downsizing.  If you sold the car and purchased another car that costs $15,000 you could save over $200 per month in payments.

  1. Downsize your house or apartment

This is another area where you might have the ability to quickly turn your budget around depending on your situation.  Housing is usually the largest single expense in the average person’s budget and therefore where we can make the single biggest impact.  Downsizing can save up to $400 and more per month – now that is a gamechanger.  If you can cut $400 on a single expense you will save yourself $4,800 per year…..how close and how fast would that get you to the goals that YOU DECLARED!!

  1. Cut the Cable

You can save quite a bit of money by cutting your cable bill, if you don’t want to go bare bones you can sign up for cheaper streaming services like Netflix or Hulu which will provide less options but are much cheaper.  Cutting your bill by $60 per month can save you over $700 per year.

 

If you did these 5 things above you could be saving over $950 PER MONTH.  I know some of these might seem like gigantic changes in your life but this is where you really need to look at your goals.  If you were more financially free could you live with the above changes?  If making the above changes meant you could take the dream vacation you’ve always wanted to take, would you make them?

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