Reducing expenses is a great way to free up extra money each month and put your hard-earned wages towards something more important such as building up an emergency fund of a few months’ worth of expenses, or saving for retirement. If you have been lacking in the long-term future and find yourself asking what an ira vs 401k are, now may be the time to get ahead on your finances and start out 2018 on the path to financial freedom. Whether you are already on top of your expenses or you are looking for extra money, we could probably all benefit instead of spending money on unnecessary expenses or items that you probably could have avoided otherwise. By making good, efficient purchases, you are sure to get ahead in no time.
Review All Current Expenses
Whether you set up bill payments or have them automatically taken out, if I asked you how much you are spending each month on necessary bills, would you be able to say? What about how much in food, gas, or spending money? If you haven’t looked in a while, try making a list of first all bills such as mortgage, utilities, car lease, student loan, etc., and see what those totals add up to. From there you can get a good idea of now how much exactly is coming in with income, going out for expenses, and how much you have left.
Get Rid of the Easy Ones
When looking at reducing monthly expenses, there are probably those that you can get rid of right away, some maybe that you even didn’t realize. Whether that is a phone insurance cost that is coming out every month, or a gym membership that you used for a few months but then slowly went less and less until now the money comes out every month but you haven’t gone in half of a year, to a newspaper subscription that you get every Sunday but pick it up from the driveway and automatically put it straight into the recycle bin.
While now you know how much your paychecks are and now much your monthly expenses are, now is the time to track spending. Try taking the last bank or credit card statement and actually go line by line and see where your money is going when it comes to food, gas, and spending money. There you can start to budget for how much you can leave yourself each month for those, not to mention tightening spending up a bit so that they are logical, without spending too little or too less. Try circling those items that you probably could have avoided and see what that total adds up to.
Cut the Cord
Cable has become a regular part of our lives that we are just used to paying for it, but if you sit back and think about how much TV you watch, let alone the type of shows you watch, is cable really necessary any longer. With many great shows and content on Netflix, if you find yourself mostly watching that, you could really cancel cable and get a Netflix subscription for around $10 a month, then get an HD antenna for all of the local channels and you could be in good shape to not miss flipping around channels to watch commercials and reality shows.
Upgrade Energy Efficiency
If you survey your own home for doors, windows, outlets, you can save the cold air coming in the winter and the warm air in the summer and finally give your furnace and air conditioner a break during the peak usage times. Now is a great time to go around while it’s cold out so you can feel any drafts coming in around doors, windows, and outlets that share an outside wall so you can caulk up and block out any drafts coming in. You will be surprised how much your bill will go down as the furnace will have to kick on less in the winter and the air conditioner in the summer.
Probably more common sense, but if you are still in debt, now is the time to really make large payments until you are finally debt free. Once you start carrying over a balance every month you start to get charged interest, so the higher the balance the less your monthly payments will chip away at the balance unless you can really start to make a dent until the balance is gone. Just think about what you can do with all of that extra money not going towards the credit card.