Frequently reducing expenses is a faster way to increase your savings rate than increasing your income. Here are a few ways that you can cut down on expenses starting today.
1. Follow a Budget
Budgeting sounds a lot like a diet, but it isn’t. A budget enables you to know where your money is going and helps you to align your spending with your money goals.
When starting a budget, first start tracking what you spend your money on. Don’t put caps on how much you can spend in each category, yet. After a few months of tracking your spending, you can then start to create a budget with realistic spending goals.
If you are spending $1,000 every month on groceries, setting a budget of $200 for groceries is only going to frustrate you. Set achievable spending limits in your budget and then slowly lower them as you see fit. You’ll be amazed to see how much you can save!
2. Don’t Use Food Delivery Services
If you are looking to reduce your food expenses, cook at home. If you aren’t ready for that, delete your food delivery app. That makes it harder to order food in a moment of weakness and saves you from the marked-up food prices, delivery fees, processing fees, tips, and more.
3. Treat Your Third Paycheck as a Bonus
Many workers are paid on a biweekly schedule, which means that they have multiple 3 paycheck months every year. These are months that have three paychecks instead of the typical two paychecks per month.
The trick is to budget your life as if you only receive two paychecks every month, and use the third paycheck to boost your savings rate, prepay bills, and more. This creates an easy win for budgeting and saving.
4. Consolidate Debts to Cut Down on Expenses
The faster you rid yourself of debt, the more money you will have available for your monthly budget.
Consolidating debts allows you to have a single payment, and frequently can reduce your overall monthly payment and reduce your interest rate. This allows for even more room for investments, paying down debts more aggressively, or building up an emergency fund.
5. Look for Free Entertainment
There are so many ways to find free entertainment nowadays. Instead of heading to the movies, head to your local library. Instead of going out to eat, pack a lunch and head to a local park.
Make sure to check out all your local library has to offer. Some have 3D printers, free tickets to local museums, popular movies or tv shows to borrow, or space to work.
6. Use Tax Credits
Now more than ever there are so many tax credits to research. If you are making a large purchase of any kind, look into the availability of tax credits to reduce your expenses on the purchase. The tax credit for a new roof comes to mind, as well as tax credits for buying a heavy vehicle.
Make sure to consult with a tax professional before making a large purchase assuming a tax credit, as you may need to take a few extra steps. Better safe than sorry.
7. Negotiate a Raise to Cut Down On Expenses
If none of the steps above seem like a great choice for you, then you may need to increase your income instead. Negotiating a raise can do just that.
You may be asking yourself is 60k a year good, but you could be asking yourself if 70k a year is good if you got a raise. My top tips for asking for a raise are:
- Using the expectations of your job, create a list of reasons why you are excelling
- Schedule a meeting with your boss, and use the list to show your track record
- As a top performer, ask for that raise
