Cutting personal expenses can be a worthy goal, but it is difficult to reach when you’re fifteen minutes late for work and haven’t had any coffee. Stopping at the store for a cup seems like a great idea and all of a sudden you’re out $3-5. Here are some tips to help you stick to cutting expenses.
Have a goal.
This should not be “I want to cut my personal expenses”; something more solid. What do you need the money for? I want to save up for a trip to Mexico or I want to buy a new car. Or I want to pay more on my student debt. Make the goal obvious; put pictures up in the room, do research, save it as your computer’s background, send yourself email alerts. Having a goal that is specific and attainable and tracking your progress towards it is a great way to motivate yourself to take steps towards it – i.e. cutting your personal expenses.
Better yet, sign up with a site like SmartyPig which lets you save towards a specific financial goal. Putting money into the account and watching it grow, and reaping rewards for it is a great way to motivate and reward yourself.
Track your spending.
Gone are the days when that required paper, pen and keeping track of receipts in your wallet. Now there are sites that track your spending on cards, categorize them, and bring up charts of expenses and income.
Mint is such a site. It tracks what you spent on each month, what you make and even better, it has ways for you to save and what types of cards will yield more rewards for your spending.
Cut the spending A: Variable expenses (Non-necessities)
This is the expenses category which is not fixed, not necessary. Decide what you put to put here – entertainment, shopping, drinks, gym, whatever you think is not critical for your survival. Think of your goal when you do this. And remind yourself that this need not be forever. It can be just till you reach your goal then you can continue your Netflix account or buy yourself new shoes.
Brainstorm ways to cut the expenses. If you are cutting Netflix, maybe you can get movies or shows by borrowing them from the library or watching free TV shows online. If you are cutting coffee stops in the morning, buy packets of readymade coffee so you just have to add hot water at work, or think about if you can make coffee at work. Think about taking a different route to work so you miss the coffee store in the mornings. There are many sites out there that have specific tips to help you cut your spending.
Cut the spending B: Fixed expenses (Necessities)
This is where it can get tricky. Rent, phone, food, clothing are all necessities. No one’s arguing that. But do they really have to cost so much?
Look at ways to cut the expenses – change your phone line, get a roommate or be a roommate, start eating at home more and brown bagging meals. Be more energy conscious, use public transportation, don’t shop or shop at second hand stores.
Don’t spend the money you save
It is crazy to see someone so happy about saving money because they found a coupon that saved them a couple of dollars, and then go around and spend that money on a treat.
Track the money you save and put it away. This is where you use sites, like SmartyPig, to transfer the money you have cut from your budget to put towards your goal. As it increases, experience has shown that so will the willingness to cut and maintain lesser personal expenses.