At this point, if you’ve been following along with our budgeting tips you’re tracking all your expenses, spending within your budget, and trying to be efficient when it comes to making purchases. So far, so good!
Now you might be thinking, “I’m budgeting, I’m living within my means. Things are running smoothly. What else is there to do?”
Earlier I mentioned the idea of being efficient – trying to get the most goods and services for less money. A one year old, slightly used car will cost less than a brand new car. A single bedroom apartment will cost less than a two-bedroom with one room converted into your home office or den. Making meals at home will likely cost less than eating out at restaurants. Keeping these sorts of things in mind can help you stay within your budget.
The next logical step, in my opinion, is to look at your current lifestyle and consider ways it can be downsized. What do you currently own or rent that could be reduced?
When you look at your monthly bank and credit card statements are there any items which keep showing up that you don’t really need or which could be reduced?
For instance, a few years ago I noticed that I hadn’t logged into my Netflix account more than once a month for the past three months. It didn’t seem worthwhile to keep the subscription running when it was only being used for about an hour a month. Cutting that small ($10/month) subscription saved $120 a year. It’s one small expense, but each little bit counts. And, if you can eliminate a handful of these unused expenses, they add up to a lot.
As another example, about four years ago I was living in a nice house. I liked it, but I was aware the house wasn’t really being fully used. There was an extra, empty bedroom and a storage area not being used. I looked around and found another place that was a bit smaller and around $800/month cheaper, once all the insurance, heating, and other utilities were factored in. This downsizing from a full house to a duplex has saved me $38,000 in the past four years.
In a smaller, but similar approach, a friend recently looked over their phone bill and noticed they were never using all their data and talk minutes. We we looked at their past six months of bills we identified the maximum amount they used and determined they could downsize their phone plan, saving $20/month. Over a three year contract, that’s $720 in savings.
These are just a few ways you can look at trimming the extras out of your budget. I think it’s especially a good idea to look at downsizing when you’re going through a transition. Are you moving, switching jobs, did your children just leave home? These are good opportunities to go through your monthly budget and look for items which you no longer need or which can be reduced to save money.
Maybe now you can switch to a smaller, more fuel efficient car? Maybe you can move into a smaller house? Maybe this is a good time to cancel the TV cable account? The little changes add up when you consider how much they’ll cost you in a year or in ten years.
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