How to Cut Expenses and Save More Money

January 8th, 2020 – It’s a new year, and for many, that means a fresh start… and often, a feeling of needing to tighten the belt. Whether you’re facing unexpected bills, student loan debt, or just want to build a more secure financial future, learning how to cut expenses and save more money is a crucial first step. This guide provides actionable strategies you can implement today to take control of your finances.

1. Understand Where Your Money Is Going

Before you can cut expenses, you need to know where your money is going. This is the cornerstone of any successful budgeting strategy.

Track Your Spending: For at least a month, meticulously track every penny you spend. You can use:
- Spreadsheets: A simple spreadsheet is a great starting point.
- Budgeting Apps: Apps like Mint, YNAB (You Need A Budget), and PocketGuard can automatically track your spending and categorize transactions.
- Good Old Pen and Paper: Don’t underestimate the power of writing things down!
Categorize Your Expenses: Once you’ve tracked your spending, group your expenses into categories:
- Fixed Expenses: These stay relatively the same each month (rent, mortgage, insurance).
- Variable Expenses: These fluctuate (groceries, utilities, entertainment).
- Discretionary Spending: Things you want but don't need (eating out, subscriptions, hobbies).

2. Identify Areas to Cut Back

Now that you know where your money is going, let’s find some areas to reduce spending:

Eating Out: This is often a huge expense. Packing lunches, cooking at home, and limiting restaurant visits can save you a lot.
Subscriptions: Do you actually use all those streaming services or gym memberships? Cancel the ones you don’t.
Entertainment: Look for free or low-cost entertainment options – libraries, parks, community events.
Energy Consumption: Simple changes like turning off lights, unplugging electronics, and adjusting your thermostat can significantly lower your utility bills.
Shop Around for Insurance: Don't just automatically renew your insurance policies. Get quotes from multiple providers to ensure you’re getting the best deal.

3. Create a Realistic Budget

A budget isn't about restriction; it's about making conscious decisions about how you spend your money.

The 50/30/20 Rule: A popular starting point: 50% for needs, 30% for wants, and 20% for savings and debt repayment.
Set Savings Goals: Having specific goals (e.g., emergency fund, down payment on a house) will motivate you to stick to your budget.
Review Regularly: Your budget isn’t set in stone. Review it monthly and adjust as needed.

4. Small Changes, Big Impact

Remember, even small changes can add up over time. Focus on consistency and celebrate your successes!

Resources: