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30 Ways To Cut Your Monthly Expenses

30 Ways To Cut Your Monthly Expenses

A while ago, for one month, myself and a then work colleague lived money-free—I cut expenses by 100%, pretty much! The job I was in at the time paid for my accommodation and transport, so all I had to worry about was food. On the second day of the experiment, however, we met a ‘freegan’ who regularly collected food thrown out by all the supermarkets in town. So, following her lead, we went along, filled up her truck with perfectly packaged food, including toothpaste and other essentials, and lived money-free for the month.

Now, I’m not suggesting you go and rummage around in supermarket bins for a month to cut expenses, because, for one, I think it’s illegal in many parts of the world! Still, there are many other ways you can cut your expenses and have lots of your monthly income left to spend, save and enjoy.

1. Write down all of your expenses

How many times do you hand over $1 or £1 for something and think, “Oh, it’s only a dollar,” and then repeat the same process every day for a month? Be mindful of where you’re spending your pennies and write down everything you spend for a month—you can then see where to cut costs in the future. Trust me, this one really does work.

2. Cut out the takeaway coffees

Get yourself a nice flask and make your own coffee. If you’re serious about cutting your expenses and you still buy a takeaway coffee every morning, buying a flask will save you at least $80 a month.

3. Cycle or walk to work

I know many of you probably have long train or car commutes, but 10km is still do-able on a bike, right? And if you’re a little on the lazy side, invest in an electric bike to help you up those hills in the morning. Ditching the train or car for a bike is a serious money saver; plus, you’re getting fitter at the same time!

4. Shop in thrift stores (at least some of the time)

You can get designer items for pennies; you can find cheap tat and upcycle it for next to nothing, and find one-off clothes you’d never find on the high street. So, if you’re looking to update your wardrobe or buy new stuff for your home, check out the cheaper alternatives first.

5. Buy the unbranded products in the supermarket

You may only be saving pennies per item, but there really isn’t much difference in the taste—do not be seduced by pretty branding! The only difference, for example with unbranded tinned tomatoes and branded ones, is the lack of salt and sugar and you can add that yourself. Why pay loads extra for it?

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6. Take your own lunch to work

Yes, it’ll take up a few extra minutes of your evening, but wouldn’t you prefer to have an extra $100 at the end of each month instead? Over the course of a year, that’s a saving of over $1,000.

7. Bulk cook your meals

Set aside a few hours on Sunday and make a load of different dishes to prepare you for the whole week. Pop them in the freezer and you won’t be tempted with takeaways or packaged meals midweek.

8. Compare gas and electricity prices

Are you really getting the best deal with your gas and electricity? It only takes a few minutes to compare deals on an online comparison site.

9. Cut out the pricey drinks

Perhaps you don’t drink much, but for a lot of people, spending a good proportion of their monthly salary on expensive boozy nights out is part of their monthly regime. If this rings true, try cutting back or going alcohol-free for a month to see how much you save.

10. Keep a penny/cent collection

Throw your loose change into a jar, then count it up at the end of each month and see how much you’ve saved—over time, you’ll be surprised by how much money you’ll make.

11. Use Freecycle

In the UK there’s a scheme called Freecycle, where you can give away your unwanted furniture, or anything else you no longer need, for free. Obviously, in return, if you need any household essentials—kitchen table, bicycle, bookshelf … you can just log on to the site and see what’s available.

12. Ditch the large overdrafts

If you’ve got an overdraft of $1,000, chances are you’ll spend it each month if you’re not careful with your money. If you’re scared to lose the overdraft completely, halve it and see if it makes you any more cautious with your money.

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13. Clear out your unwanted stuff

Have a car boot sale, sell your unwanted things on eBay … if you’ve been living in the same house for over a year, chances are that unless you’re super-organized, you’ll have at least a few things that are worth selling to make some extra money.

14. Share car journeys

If you drive to work alone every day, see if there are any other people who live near you so you can share journeys and cut your costs on petrol. It’ll pay off in the long run.

15. Re-evaluate your insurance

Whether it’s life, health, or travel insurance, shop around, compare prices and make sure you’re getting the best deal for the least amount of money. Remember though, that cheapest does not always equal the best.

16. Change your phone deal

Do you really need all those minutes and extras? Is there a cheaper phone deal that will save you money in the long run? Shop around and see what other phone deals are out there.

17. Do not take out any pay day loans

The adverts may be appealing, but the interest rates on pay day loans make these companies no better than con artists!

18. Dry clean at home

If you’re a regular at your dry cleaners, cut costs by buying a home dry cleaning kit and a spot remover pen.

19. Take another look at your internet bills

Can you get a better deal elsewhere? Do you live in an apartment block? If so, perhaps you can share an internet connection with those around you—providing you trust them.

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20. Make more gifts for people

Now that we’re coming up to the festive season, rather than splashing out on expensive gifts for people, cut expenses and make your own cards and presents—at least for some people. The gesture won’t be forgotten. Plus, everyone knows the gift of time far outweighs the gift of money.

21. Cut back on expensive cleaning products

There are loads of ways you can make your own cleaning products; for example, vinegar and baking soda work wonders for cleaning your drains; spray lemon juice on surfaces to get rid of stains and streaky grease marks; and use vinegar to scrub up wooden flooring.

22. Simplify your beauty regime

We can all be seduced by fancy creams claiming to minimize pores, get rid of wrinkles and leave our skin looking healthy and plump; but, in reality, all your skin needs is a good diet, plenty of water and hydration. Try ditching expensive creams for almond or coconut oil. It’s really cheap and will leave your skin looking incredible.

23. Cancel your gym membership

Get on your bike, jog round the park, and lift weights at home. You could even organize regular work out sessions for free with others who want to ditch the gym. You don’t need to pay to be fit!

24. Turn your lights off

When you leave a room, flick the switch and cut expenses on your electricity bills. If you live with forgetful people, place little stickers by the switch to give people helpful reminders.

25. Replace bulbs with energy saving ones

Cut expenses and save the environment at the same time. It’s a no-brainer!

26. Pay for things with cash only

Allow yourself a certain amount of money each week and spend only that amount. Unless you’re constantly checking your finances, there’s no way you can keep up-to-date with what you’ve really spent if you keep paying for things with your credit or debit cards.

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27. Tell your friends and family that you want to cut expenses

If you’re ever tempted to spend more than you intended, tell everyone you spend time with what you’re doing. Or even better, arrange for a group of you to all cut expenses at the same time.

28. Get savvy with deals

Sign up to Groupon, or get Amazon deals sent straight to your inbox, and save heaps of money on theater tickets, holidays, restaurant meals, and much more.

29. Take care of your teeth

Brush your teeth twice a day and don’t forget to floss. If you don’t take care of your teeth now, you’ll pay the price in expensive dental bills years down the line.

30. Be grateful for the money you have

Change your attitude towards money and be grateful for what you have rather than complaining about not earning enough or having enough of it. You’ll be surprised by how much a simple change of attitude can help you to manifest more money and help you cut expenses.

If you think there are any useful tips missing from this list, please leave a comment below.

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Last Updated on September 2, 2020

How to Set Financial Goals and Actually Meet Them

How to Set Financial Goals and Actually Meet Them

Personal finances can push anyone to the point of extreme anxiety and worry. Easier said than done, planning finances is not an egg meant for everyone’s basket. That’s why most of us are often living pay check to pay check. But did anyone tell you that it is actually not a tough task to meet your financial goals?

In this article, we will explore ways to set financial goals and actually meet them with ease.

4 Steps to Setting Financial Goals

Though setting financial goals might seem to be a daunting task, if one has the will and clarity of thought, it is rather easy. Try using these steps to get you started.

1. Be Clear About the Objectives

Any goal without a clear objective is nothing more than a pipe dream, and this couldn’t be more true for financial matters.

It is often said that savings is nothing but deferred consumption. Therefore, if you are saving today, then you should be crystal clear about what it’s for. It could be anything, including your child’s education, retirement, marriage, that dream vacation, fancy car, etc.

Once the objective is clear, put a monetary value to that objective and the time frame. The important point at this step of goal setting is to list all the objectives that you foresee in the future and put a value to each.

2. Keep Goals Realistic

It’s good to be an optimistic person but being a Pollyanna is not desirable. Similarly, while it might be a good thing to keep your financial goals a bit aggressive, going beyond what you can realistically achieve will definitely hurt your chances of making meaningful progress.

It’s important that you keep your goals realistic, as it will help you stay the course and keep you motivated throughout the journey.

3. Account for Inflation

Ronald Reagan once said: “Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hitman.” This quote sums up what inflation could do your financial goals.

Therefore, account for inflation[1] whenever you are putting a monetary value to a financial objective that is far into the future.

For example, if one of your financial goal is your son’s college education, which is 15 years from now, then inflation would increase the monetary burden by more than 50% if inflation is a mere 3%. Always account for this to avoid falling short of your goals.

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4. Short Term Vs Long Term

Just like every calorie is not the same, the approach to achieving every financial goal will not be the same. It’s important to bifurcate goals into short-term and long-term.

As a rule of thumb, any financial goal that is due in next 3 years should be termed as a short-term goal. Any longer duration goals are to be classified as long-term goals. This bifurcation of goals into short-term vs long-term will help in choosing the right investment instrument to achieve them.

By now, you should be ready with your list of financial goals. Now, it’s time to go all out and achieve them.

How to Achieve Your Financial Goals

Whenever we talk about chasing any financial goal, it is usually a two-step process:

  • Ensuring healthy savings
  • Making smart investments

You will need to save enough and invest those savings wisely so that they grow over a period of time to help you achieve goals.

Ensuring Healthy Savings

Self-realization is the best form of realization, and unless you decide what your current financial position is, you aren’t heading anywhere.

This is the focal point from where you start your journey of achieving financial goals.

1. Track Expenses

The first and the foremost thing to be done is to track your spending. Use any of the expense tracking mobile apps to record your expenses. Once you start doing it diligently, you will be surprised by how small expenses add up to a sizable amount.

Also categorize those expenses into different buckets so that you know which bucket is eating most of your pay check. This record keeping will pave the way for cutting down on un-wanted expenses and pumping up your savings rate.

If you’re not sure where to start when tracking expenses, this article may be able to help.

2. Pay Yourself First

Generally, savings come after all the expenses have been taken care of. This is a classic mistake when setting financial goals. We pay ourselves last!

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Ideally, this should be planned upside down. We should be paying ourselves first and then to the world, i.e. we should be taking out the planned saving amount first and manage all the expenses from the rest.

The best way to actually implement this is to put the savings on automatic mode, i.e. money flowing automatically into different financial instruments (mutual funds, retirement accounts, etc) every month.

Taking the automatic route will help release some control and compel us to manage what’s left, increasing the savings rate.

3. Make a Plan and Vow to Stick With It

Learning to create a budget is the best way to get around the uncertainty that financial plans always pose. Decide in advance how spending has to be organized

Nowadays, several money management apps can help you do this automatically.

At first, you may not be able to stick to your plans completely, but don’t let that become a reason why you stop budgeting entirely.

Make use of technology solutions you like. Explore options and alternatives that let you make use of the available wallet options, and choose the one that suits you the most. In time, you will get accustomed to making use of these solutions.

You will find that they make it simpler for you to follow your plan, which would have been difficult otherwise.

4. Make Savings a Habit and Not a Goal

In the book Nudge, authors Richard Thaler and Cass Sunstein advocate that, in order to achieve any goal, it should be broken down into habits since habits are more intuitive for people to adapt to.

Make savings a habit rather than a goal. While it might seem to be counterintuitive to many, there are some deft ways of doing it. For example:

  • Always eat out (if at all) during weekdays rather than weekends. Weekends are more expensive.
  • If you are a travel buff, try to travel during off-season. You’ll spend significantly less.
  • If you go shopping, always look out for coupons and see where can you get the best deal.

The key point is to imbibe the action that results in savings rather than on the savings itself, which is the outcome. Focusing on the outcome will bring out the feeling of sacrifice, which will be harder to sustain over a period of time.

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5. Talk About It

Sticking to the saving schedule (to achieve financial goals) is not an easy journey. There will be many distractions from those who are not aligned with your mission.

Therefore, in order to stay the course, surround yourself with people who are also on the same bandwagon. Daily discussions with them will keep you motivated to move forward.

6. Maintain a Journal

For some people, writing helps a great deal in making sure that they achieve what they plan.

If you are one of them, maintain a proper journal, where you write down your goals and also jot down the extent to which you managed to meet them. This will help you in reviewing how far you have come and which goals you have met.

When you have a written commitment on paper, you are going to feel more energized to follow the plan and stick to it. Moreover, it is going to be a lot easier for you to track your progress.

Making Smart Investments

Savings by themselves don’t take anyone too far. However, savings, when invested wisely, can do wonders.

1. Consult a Financial Advisor

Investment doesn’t come naturally to most of us, so it’s wise to consult a financial advisor.

Talk to him/her about your financial goals and savings, and then seek advice for the best investment instruments to achieve your goals.

2. Choose Your Investment Instrument Wisely

Though your financial advisor will suggest the best investment instruments, it doesn’t hurt to know a bit about the common ones, like a savings account, Roth IRA, and others.

Just like “no one is born a criminal,” no investment instrument is bad or good. It is the application of that instrument that makes all the difference[2].

As a general rule, for all your short-term financial goals, choose an investment instrument that has debt nature, for example fixed deposits, debt mutual funds, etc. The reason for going for debt instruments is that chances of capital loss is less compared to equity instruments.

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3. Compounding Is the Eighth Wonder

Einstein once remarked about compounding:

“Compound interest is the eighth wonder of the world. He who understands it, earns it… He who doesn’t… Pays it.”

Use compound interest when setting financial goals

    Make friends with this wonder kid. The sooner you become friends with it, the quicker you will reach closer to your financial goals.

    Start saving early so that time is on your side to help you bear the fruits of compounding.

    4. Measure, Measure, Measure

    All of us do good when it comes to earning more per month but fail miserably when it comes to measuring the investments and taking stock of how our investments are doing.

    If we don’t measure progress at the right times, we are shooting in the dark. We won’t know if our saving rate is appropriate or not, whether the financial advisor is doing a decent job, or whether we are moving closer to our target.

    Measure everything. If you can’t measure it all yourself, ask your financial advisor to do it for you. But do it!

    The Bottom Line

    Managing your extra money to achieve your short and long-term financial goals

    and live a debt-free life is doable for anyone who is willing to put in the time and effort. Use the tips above to get you started on your path to setting financial goals.

    More Tips on Financial Goals

    Featured photo credit: Micheile Henderson via unsplash.com

    Reference

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