When we talk about how to drastically cut expenses, one of the first pieces of advice we always seem to get is “stop drinking $5 coffees every day”. The problem with that is not everyone is drinking $5 coffees every day. While that may be an easy way for some to cut their expenses, it doesn’t apply to everyone. This article will discuss some easy ways to live within your budget. Cutting your household expenses and adjusting to a new budget doesn’t have to be too uncomfortable. Let’s talk about painless ways for how to drastically cut expenses for long-term success.
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Know Where You are Starting From
The first step in saving money is to figure out what money you have coming in, what money is going out, and most importantly, where it’s all going. Gather your bank statements for the past 3 to 6 months. The more bank statement you dig into, the better. If you really want to figure out where your money has been going, print the entire six months.
Grab some highlighters and go through your bank statements line by line. For example, you can use yellow for income, pink for necessary expenses, and blue for unnecessary expenses or items that you can cut out. You can set it up however you would like.
Next, go through all of the unnecessary expenses and determine which ones will be the least painful to cut. Make a list of which costs you will cut first, second, third, etc. If you do this in phases, it’s not a huge change all at once. Instead, you can ease into it. If you are drowning in debt and have significant leaks in your budget, you should be more aggressive with this process and cut expenses as much as possible right away.
Try using this resource for gaining control of your finances.
Make Sure All Your Money is Accounted For
Rather than cutting out all of your unnecessary expenses at once, which would be very difficult to do and not very realistic in the long term, make small changes to “patch the leaks.” Any money that’s unaccounted for month to month is a leak. Any money that goes towards unnecessary items such as fast food or that daily cup of specialty coffee is a leak.
Some leaks you may not realize are actually leaks may include food, utilities, and entertainment expenses. This doesn’t mean you have to cut out entertainment entirely or that you have to switch to the off-brand for all of your food. It just means you’re going to be aware of where every single penny of your income is going, so you can make sure you are spending it responsibly. Everyone should have an entertainment budget, and nobody should have to eat off-brand everything!
Consider Your Utilities
Cable, internet, and cell phone bills can make up a large chunk of your monthly expenses if you’re not careful. It may not be practical to downgrade to a slower internet speed if you use the internet for work. However, you can easily cut the cable and get Netflix or Hulu if TV is a priority.
Call your cell phone company and negotiate a lower rate. Ask about military or veteran discounts, AARP discounts, etc. Any deal they may have, see if you can get it! Some companies even offer discounts for law enforcement, first responders, and teachers. If the discounts are there and you qualify, you might as well utilize them.
Watch Your Food Expenses
Even if you aren’t eating fast food every day, grocery bills alone easily add up fast. You can drastically reduce your grocery bill by meal planning in advance. You can even use curbside pick-up services to save time. Ordering your food online and picking it up outside the store may be one of the best money-saving and time-saving inventions ever.
Using curbside pick-up means no more last-minute impulse purchases in the checkout line. It means no more Target runs that should have been $50 but were more like $200!
Evaluate Your Entertainment Costs
How much are you spending on entertainment each month? Whether it’s a Playstation subscription or video game or going to the movies, bowling, or whatever it is you do for entertainment, what’s your budget? If you don’t have one yet, now is the time to work on creating one. As mentioned earlier, entertainment is essential. You don’t need to cut it off completely, but being aware of how much you are spending and making sure it relates to how much it enhances our life is an essential step to cutting household expenses.
After you’ve finished your household financial audit and patched the leaks, it’s time to set a budget for entertainment. Being on a budget doesn’t mean you have to lock yourself in the house all day, but it does mean making smarter choices with the money you have set aside for specific activities. Instead of spending $50 going to the movies, find a budget theater showing old movies for $2 per person. Or, watch the film at home with popcorn that costs much less than the price of movie theater popcorn!
Making small changes like this makes budgeting much more manageable. You can even turn it into a game for your family. Have everyone in the family figure out the cheapest way to have a family fun night. Alternate family nights at home, with board games and popcorn, and going out. Finding cheap bowling days and times, cheap movie days and times, etc. will ensure your family never gets bored and doesn’t go over budget.
If you didn’t with your audit, one last thing to check is your recurring subscriptions via Paypal. Also, check your Cash App, Zelle, or other payment methods you use. The idea is to track every single dollar that comes in and goes out. Once you start doing this one simple thing, the rest falls into place rather seamlessly!
Next Steps for How to Drastically Cut Your Expenses
After you’ve worked on painlessly cutting household expenses, you may need to go back through and be even more ruthless with expenses. Or, you may want to work on creating more income with side hustles. You can drive for companies like UberEats, or you can create your streams of income online like hundreds of thousands of others do every day. No matter what your financial situation is, it can improve with planning and budgeting!
If you follow these ways to cut your expenses, you will be well on your way to financial freedom for good.
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