For some people, the only way to save more money is to earn more money. While there is nothing wrong with saving more as your income increases, many don't have the luxury of relying on this strategy. For this reason, they get stuck looking for creative ways to save a buck here and there. Living on a tight budget doesn't have to be difficult.
Before you make any changes to your budget, you need to review your current spending and saving habits. How much money are you spending every month on essentials? How much are you spending on things you just don't need? And just as importantly, how much are you saving when you subtract all your expenses from your total income?
You may be surprised to find that shaving a few expenses from your monthly budget can leave you with $100 or more in your pocket.
Fourteen Cuts to Make to Your Monthly Budget
The following tips can help you save money every month from mundane daily expenses like coffee to paying the bills.
1. Daily Coffee
Are you the type of person who is always stopping at Starbucks, grabbing a cup of your favorite coffee to start off your day? This is a habit that could be costing you hundreds of dollars a month.
Yahoo! Finance touches on the finer details of a Starbucks addiction, including how much it could be costing you every month. Hang onto your seat, as the numbers may shock you!
2. Vending Machine Snacks
In the morning you head to the vending machine for a pack of donuts. In the afternoon it is time for a soda and a bag of chips. And don't forget about that candy bar for the drive home.
Since you are only feeding the machine dollar bills and change, you may not feel like you are spending that much. However, this can really add up. Even if you only spend fifty cents a day, by the end of the month it works out to $10 or so. And that is if you only spend $.50/day, which is much less than the average person consumed by this habit.
3. Eating Out for Lunch
Just because this is something your coworkers are doing it doesn't mean you have to follow suit. There is nothing wrong with meeting up with coworkers at a local restaurant for an afternoon bite. There is something wrong with doing this every day of the week.
To calculate savings, try using a lunch savings calculator. With this calculator, you can compare the cost of taking your lunch to work to eating out. Even more so, you can see how much your savings could earn in interest over time.
Once you run the numbers with this calculator you may never again stop at your favorite restaurant for lunch. Buying your groceries on a budget is one useful way to never exceed your allotted food allowance.
4. Pumping Gas
Even if you use tools to find the lowest gas prices in your area, the cost of one more fill-up a month can break your budget. This is even more so the case if you drive a truck or SUV with a large tank (that Cadillac Escalade is expensive).
Things come up over the course of a month that require you to drive. From daily trips to work to carting your kids around, you will likely spend a lot of time behind the wheel.
Imagine this: if you could cut one tank of gas from your budget every month, you would likely save $40 or more. For those with larger vehicles, the savings could be in excess of $1,000 by the end of the year.
Rather than drive everywhere, look into options including but not limited to: public transportation, walking, riding a bike, and car pooling.
5. Cut the Cable bill
In today's day and age, everybody loves to watch television. From sports to movies and everything in between, there is always something good on. Did you know the cost of all those extra channels could be holding you back from reaching your savings related goals?
Tip: Take the time to go through every channel available to you, making note of which ones you do and do not watch. You may find that you are paying for channels you don't have any interest in. Living on a budget means being conscientious of all resources.
Tactics to reduce utilities costs vary by technical sophistication how the system was installed into your home. Implement a tactic that works for you, fits within your budget and meets your goals, so that you're no longer shocked the next time you see your electricity bill.
Here are some tips that can help reduce the price tag on your electricity consumption
- Convert some appliances from natural gas to electricity, taking advantage of the stable electricity prices that pale in numerical comparison with the natural gas prices, which have increased significantly in the last several years. Be mindful of the conversion costs involved here, but the overall benefits are worth it.
- Convert equipment like water heaters and gas furnaces.
- Improve weatherproofing to reduce little air leaks, which could cause electricity bills to spike, especially when warm or cold air penetrates your house and forces heating or air conditioning units to work harder than necessary.
- Go after wasteful usage. Believe it or not, not switching off that basement light for days or having the computer run continuously all year long – except the forced reboots resulting from software updates – invariably add up and produce the kind of high numbers you don't like to see on your electricity bill.
- If possible, use alternative energy to save cash. The upfront costs, mainly for installation, for some alternative energy equipment may be high, but think long-term benefits and the ability to save cash down the road. Alternative energy uses include solar heating, wind-powered turbines and wood-burning stoves.
7. Check Your Credit Card Interest
You're paying too much interest card if you carry a high balance, only make the minimum payment every month, or have a credit score that is lower than 640 – that is, in subprime territory, as financial analysts and debt advisers usually say.
Contact your credit card company and ask for a lower rate. That's it: just ask. You'd be surprised the kind of positive feedback that diplomacy, politeness and decorum often produce. The company might grant your request, especially if you've been an exemplary cardholder in the last, say, 6 to 12 months.
8. Check out Rewards Programs
Rewards programs are designed to make you spend, making sure you get an incentive whenever you reach a specific threshold. But ask yourself whether you really need some of the items you regularly buy with rewards programs cards.
Before jumping on the rewards programs train, make sure you understand the good, bad and ugly parts of the programs.
9. Refinance Your Home
Stay in touch with your banker and constantly monitor interest rate information to determine the best time to refinance. Timing is essential in refinancing, so make sure you only apply when interest rates are significantly lower than the rate you're currently paying – say, from 8% to 5.5%.
If the rate difference is too slim, you could end up losing because the monetary advantage that attracted you to refinancing in the first place would be absorbed by refinancing fees.
10. Look at your Internet Bill
Review your Internet bill and figure out what the competition is offering. The goal is to make sure you're not paying too much, so call your provider and ask for ways to slash your Internet. Also, reassess your needs and consider switching, if possible.
11. Examine your Telephone Bill
The answer is yes, especially if you regularly make long-distance calls. Consider using alternatives like VoIP or computer-enabled video communication to reduce your overall phone bill. Most phone companies offer a flat rate for local calls and calls made within the United States and, sometimes, Canada.
12. Save on Cell Phones
You might be paying too much for cell phone communication if you use the device for international calls or spend an inordinate amount of time browsing the Internet. Use Billshrink.com's comparison tool to see if your cell phone company is ripping you off or is within a reasonable range of competitors' prices.
13. Slash Financial Fees
Besides credit card charges, financial fees include things like overdraft fees, balance transfer fees, and IRS' penalties for late fiscal payments – not to mention those forgotten traffic tickets that silently accumulate interest over the years. Go through these charges and try to pay off those with higher rates, like tax debt and overdrafts.
14. Find Out What Insurance You Need
Use this tool to calculate your life insurance needs and this tool to estimate your auto insurance needs. Some insurance companies reward consumers who display good behavior by way of reduced premiums or other forms of discounts.
Fourteen Cuts to Your Monthly Budget Recap
If you are able to shave just one of these fourteen expenses from your monthly budget you will save big. Imagine if you can get rid of several. Soon enough, you may find yourself with hundreds of dollars in savings every month.