Let’s face it, we can all use some cost cutting; even millionaires regularly check heir budgets and see where there is excess dead weight that they can get rid off to save more money. But it’s never easy – and what may seem like a painful task (it is!) it’s still necessary and will take some honest thinking through. Ideally you do it as a family, or a couple if you share many of the costs with a partner, but if that’s too sensitive for you at this time, no harm in starting solo. Here’s what I have done to get me through it, it’s a work in progress (even if I become a millionaire) but a good start helps you set the basics forward….it’s never too late to start.
- Use a computer software, I use excel, any program that allows you to do math formulas or sets it up in a calendar format (you can use a calculator but having it automated is easy and will save you time).
- Figure out all your monthly expenses and pre authorized payments including your power, water, property tax, rent/mortgage, cell phone, internet, gas bills to name a few. List them out and if they vary from month to month but a generous average (as a buffer) and then fine tune it if you see a consistent reduction.
- List out all your monthly incomes including government benefits, salary, investments, rental income if you’re a land lord etc.
- Do a month by month chart with a simple income minus costs calculation – start with the money I your bank account as the first amount and see how it works monthly (are you loosing money from your account on a monthly basis – so a negative revenue – or is it going up/staying the same – which it should be). If it’s going down or staying the same you need ot make to urgent monthly cost cutting, having said that you should still consider cost cuts where possible even if there is more money coming in than going out.
- If you have extra monthly income – take that out as savings and not too be touched, so that doesn’t make it look like you’re rolling in money and will motivate you to check you monthly budget for even more cost cutting where you can.
- If you are loosing more money that you should, you’ll have to take drastic action.
- When it comes to cost cutting check anything that has a “plan” involved. That’s TV, cable, cell phone, and internet package. Downgrade to the most basic level if you need drastic cuts, otherwise go down to what you would think is bearable, you’ll be surprised how quickly you’d get used to it. If you can wait for Boxing Day, thanksgiving or other seasonal sales to sign contracts and get freebies, otherwise do it immediately and shop around.
- Cut down on grocery list by buying generic brands and going for more affordable grocery chain, you’ll see your monthly grocery shopping budget cut down considerably – again opt for sales where possible (I personally find coupons tedious but if I have to, I would).
- Consider LED and energy efficient light bulbs and check your windows for any air leaks or gaps – but be a small cost in the beginning but you’ll see your monthly heating/cooking and power bill cut down considerably. Plus LED and eco friendly bulbs last longer, so less light bulbs and costs in the future.
- Clothes from Good Will or consignment stores are never an embarrassment, I would wear it as a badge of honour for individuality and creativity in getting one of a kind clothing pieces. Wash them and enjoy them knowing you mad e a very smart decision plus you helped others who are more in need and who don’t have the luxury of choice where they get their clothes.
- Seasonal sales for gifts to buy for the whole year is a definite plan I usually take on. Buying gifts for all my family for the coming year during Black Monday or Cyber Friday is not only smart but makes a big difference in your yearly budget. It might sound like planning way a head, but the year will fly by, and it will save you a headache of getting the gifts later on. Put them aside, wrap them if you want and put post it notes on what gift goes to who on what day. This will also make sure you don’t miss the all too important dates.
- Be honest with yourself and if you need to take more drastic measures, make sure you rethink some long term plans. Trips, education plans, life insurance, and even monthly donations should be rethought. It’s hard but think that it’s temporary until you get your house in order and when you get the budget back, prioritize these important plans. Long term they make sense but if in the short term you are in need of extra monthly income, you’ll have to take those drastic, and painful decisions and delay those plans for another – financially more secure time.
Any other ideas on cutting monthly costs to balance a budget, would love to hear them?!