You’ve completed your 30 day spending journal and created a budgeting spreadsheet of all your income and expenses. It’s possible that you’ve discovered you are spending more than you make each month. Now that you know where your money goes, you can begin to analyze your expenses and look for ways to reduce your spending, so you can balance your budget.
Start with the easy costs – expenses that you can control easily because you can probably do without these items for a while. These are called discretionary costs. It’s your choice whether or not you go out to dinner, purchase that new dress or buy a bigger TV.
Next, take a serious look at those ‘fixed’ costs in your life. Is your home or new car costing you more than you can afford. It might be time to make a plan to permanently reduce your cost of living so you can meet your long term financial goals.
Here are some additional tips to help you look for ways to save money:
- Nothing should be off the list. You might think you need that gym membership, but if you are serious about cutting back you have to look for other ways to meet your needs at a lower cost.
- Get competitive quotes for everything. Taking a little time to compare insurance premiums, cell phone plans and other costs can result in tremendous savings.
- Comparison shop. Don’t always assume the sale price at one store is the best deal. Look at alternate brands. Often you can get comparable quality merchandise for a lower price just by switching stores or by switching from the name brand to the store brand.
- Eliminate impulse buys. Last minute shopping decisions can reverse a months worth of careful planning and savings. If you don’t think you have the discipline to avoid spending, leave the credit cards at home. Make a list and set priorities.
- Save ahead for big ticket items. Don’t buy expensive items unless you have planned and saved for them. You should not as a rule use credit to pay for consumable goods (items that are used up and replaced often). This includes TV’s, computers as well as every day living expenses.
Once you have identified some savings areas, make an action list to match your savings dollars and attach some dates to it. If you are going to cut back on magazine subscriptions, make a note to send your cancellation notices by a certain date so the savings can begin.
Targeting in on expense savings and taking corrective action, is the best way to control your budget.