When it comes to cutting back on expenses, it can be easy to say, “just spend less money than you make,” but with regular and rising expenses, that becomes easier said than done. Here are some straightforward ways to manage and reduce your expenses so that you can save more money and afford the life that you want.
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Dynamic expenses are things that you pay for, but the total amount paid varies. Groceries and gas are both examples of dynamic expenses.
You can reduce your dynamic expenses by lowering your budget in that category. For example, if you usually spend between $150-$200 per week on groceries, you can try to reduce that budget by making $150 the upper limit to your spending. This artificial cap frees up that flexible $50 and allows you to apply it somewhere else. In this way, you can adjust your budget to save more and spend less. Establish a test period for your new budget before promising that money elsewhere. Give yourself a month without moving any extra money around, but still aiming for the lowest target for your spending goals. This helps prevent you from overleveraging your money and keeps your finances consistent. By utilizing a test period, you can gradually adjust your budget without overpromising that money.
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Static expenses are things you pay for that remain consistent. Rent and car insurance are both examples of static expenses.
You reduce your static expenses differently from your dynamic expenses. Each situation varies for static expenses. You can usually reduce these expenses by canceling, downgrading, or bargaining for the different services that you pay for. This may mean finding a different insurance provider or reducing your internet speed. If you notice that you are spending a sizable portion of your money on rent, it might be an indicator that you should find a less expensive living solution. You can save money on static expenses if you are willing to compromise.
Easily trim your budget with Banzai’s free budget coach
Banzai: Trim Your Budget Coach
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Managing Infrequent Purchases
The big purchases that you make infrequently can be difficult to budget for. Examples include getting new tires for your car or buying a new phone. These are things that need to happen on an infrequent basis, but they are still inevitable expenses. Rather than being hit unexpectedly with expenses like these, you can anticipate them beforehand by accounting for the costs in your budget. For example, if you anticipate buying a new smartphone every year, you just need to divide the average cost of the phone by the months until you expect to buy it. (For example, $800/12 months = $66.6/month.) Then, you can add this equation into your budget as a monthly expense. But instead of that money going away at the end of the month, it sits in your savings in preparation for when you need it.
Once you start saving for expenses down the line, make sure that you keep track of where you have promised your money. It is easy for it all to get mixed together when it is in one account for a long time. Keeping a “savings account” sheet that explains what the balance of your savings is comprised of is a good way to keep track of your money. This helps you to know what your money is intended for, so that you don’t dip into money that was intended for something important.
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Budget to Afford The Life You Want
Reducing your expenses doesn’t have to be a painful process. After all, the point of budgeting is to get the most out of your money. It is important to experience things that you enjoy. If you like having an unlimited data plan or living in an expensive apartment, that is something that you can make a financial priority. The practice of budgeting is not here to take that away from you: it is here to make that possible. Your money can be moved around to other places so that you can afford the standards of living that you desire. We don’t recommend reducing and reducing until you have nothing left – you deserve luxurious things, too. Don’t forget it.
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Additional Tips & Tricks
Here are some additional tips to help you keep your budget on track.
Divide Your Paycheck
Whether you have a direct deposit or receive a physical check from your employer, you should make a habit of dividing your pay amongst your accounts as soon as you deposit it. This keeps your money organized from the start and holds you accountable for contributing to your long-term savings and other goals.
Create an Emergency Fund
An emergency fund is an important part of your financial portfolio. Having money set aside specifically for the unexpected helps you avoid dipping into your other savings accounts or taking on unnecessary debt.
Learn the importance of building an emergency fund:
The Importance of an Emergency Fund
Budget to Zero
Budgeting to zero is the practice of allocating all your income to your expenses. This is an aggressive style of budgeting that encourages you to adhere to your spending goals with the utmost importance. When every one of your dollars is set for specific purposes, it puts you under pressure to stick to your budget. But remember, budgeting to zero only works when you have money left over to pursue the things that you enjoy and contribute to your savings. Avoid adding on additional expenses just to fulfill your income – you won’t see good results if you do so.
Budget With Your Partner
If you have a partner that you share finances with, it is very helpful to budget together for a complete view of your finances. Rather than dealing with the unpredictable nature of spending individually, try combining your household expenses together and budgeting them equally. This can be assisted with a joint checking account and debit card.
Learn how to track your joint expenses:
Banzai: Tracking Your Joint Expenses
Setting reminders for your financial upkeep helps you take time for the maintenance you need. This can include paying down credit cards before the due date, depositing paychecks, and updating your budget. You can also block off time in your calendar for longer budgeting projects.
Those are the basics of how to trim your expenses. Keeping a budget is a discipline that helps you to save money and understand what your financial situation looks like. And despite all the numbers and calculations, budgeting doesn’t need to be boring. You have the creative power to make your budget entirely your own. Budget at your own pace and enjoy the process of it.
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