Whether it’s because of a tough economy or lingering bills, anyone can find themselves working with a tight budget. During such a strenuous time, it may seem impossible to save money. But don’t worry! There are some simple things you can do to save money. A basic budget and some relatively painless expense cuts could go a long way to lowering your monthly costs—and help you take back control of your finances.
How Do I Make a Budget?
Making a budget is easier than you’d think! There are a few different steps you’ll need to go through, but once you finish, you’ll be able to exercise unparalleled control over your own spending.
The fist thing you need to do is create some categories to track your spending. Some common categories are things like:
- Car Expenses
- Student Loans
Once you have your first draft of categories, you need to spend an entire month writing down everything you spend money on. You need to put each expense in the appropriate category and include what the expense was and how much it was for. After you’ve done this for the entire month, add up each category to find out how much you spent. Congratulations! Now you’ve got your budget for the previous month.
Now that you know where your money is going, you can decide how you want to spend it with purpose. For example, let’s say you want to pay down your student loans faster. Now that you know where all your money is going, you may notice that you’re spending $400 a month on restaurants. If you can cut that amount to $200, which is still $50 a week, that’s money you could put towards paying down your debt, an extra $1,200 a year. Another easy way to save money on a tight budget is to cut expenses.
How Can I Save Money on a Tight Budget by Cutting Expenses?
The easiest way for most people to save money by cutting expenses is reducing fixed costs. Some of the more common fixed costs people have are:
- Rent: This may be one of the harder fixed costs to reduce, but if you can move to a place that is a few hundred dollars cheaper per month, that’s a savings of several thousand a year. It’s important to do the math on savings though! Before you move, make sure your savings won’t be eaten up by a longer commute, moving expenses, etc.
- Subscriptions: Netflix, Hulu, Cable, Amazon Prime. All these subscription services cost money. Do you really need all of them? How much money could you save be cutting out half of the subscriptions in your life? If you’re worried about how you’ll fill your time, you can take up free activities. When’s the last time you visited your local library? Library lending means you can get nearly any book, CD, or movie. Also, many libraries have apps you can use to listen to audiobooks for free.
- Insurance: When’s the last time you reviewed your auto insurance policy? If it’s been a few years, it might be time to shop around for a cheaper one. If you’re getting your insurance from multiple sources, you may be able to save money by getting multiple policies from the same provider.
- Interest Rates: Do you have a credit card or loan interest? If you contact your provider, they may be willing to lower your interest rate. In the case of a credit card, some companies offer free balance transfers, or zero interest on balance transfers for one year. Shop around and see what you can find.
Another great way to save money is by changing your life habits. You can do things like:
- Reduce Car Usage: You can reduce your transportation expenses by quite a bit reducing the use of your car and rideshares by taking the bus instead. If you need to drive, say to work, are you able to carpool with someone?
- Eat Out Less: How frequently do you eat out? Do you order lunch out at work every day? If you start bringing your lunch from home, you may be able to save up to $10 each day. That’s $200 a month!
- Use Sales Strategically: Some people recommend buying in bulk or purchasing items on sale. The problem with that is, you need to already have some money to buy in bulk, and if you buy items on sale that you wouldn’t normally buy, you may not use them. If you buy things while they are on sale, be sure they are things you’d be using anyways. After all, if you buy something perishable that you can’t use, it will be wasted money if it goes bad because you didn’t use it in time.
As you can see, with a little effort, you could create a functional budget for yourself that will help you save money. You can also reduce expenses to help ease a tight budget. Combing these two strategies can help you reduce your stress levels and achieve your financial goals.