If you’re anything like me, you’re probably always trying to find ways to squeeze a little more money out of your budget. Keeping a handle on your budget is a constant process that changes as time goes by, and it’s a good idea to take some time out to revisit it every once in a while to see if you might be missing some places where you’re overspending. It’s easy to overlook some pretty obvious places where we can improve, but the great thing is that it’s never too late to start. Here are some ways you can manage to squeeze a little more out of your monthly budget.
1 - Stop eating out
This is the worst one for me. For some reason I tend to spend a lot of money on eating out. Whether it’s restaurants or fast food, the temptation of quick deliciousness is a major money hog. If you’ve shown a tendency to eat out often, calculate how much you spent on eating out last month. Chances are you’ll be amazed at how much money you’re spending, I know I always am. On average eating out for our family costs somewhere between $15-$75 depending on where we go, so going 2 or 3 times a week turns into $120-$900 a month! One quick way to increase your cash flow is to do without the eating out.
2 - Make your lunch
This is an extension of the first one, but deserves it’s own for the simple fact that it’s related to work. For most of us, work is a place we go to make money. The last thing you want to be doing is spending some of that hard earned money while at work. I used to be in a bad habit of buying my lunch every day at work. If you say that an average (cheap) lunch costs $5-$10, you can see that adds up to $100-$200 a month or more.
3 - Pay less for your services
Nowadays many companies offer bundled services and/or special deals in attempts to cross sell their other products. If you are in need of all the services anyway, this is good for you. If you have your home phone, mobile phone, internet, and television services with all different companies, you’re possibly spending much more than if you went with just one. There are a few options out there for all your phone, internet, and television needs and by bundling the services you can get big savings as well as simplifying to only one bill per month. If you’re a rabid fan (like me) and can only watch your favorite sports team on the DirecTV Sunday Ticket package since you live out of state, well…you’re probably out of luck for this one (at least for the TV part). But otherwise, I highly recommend it for the sake of savings and simplicity.
4 - Conserve energy and water
One of the first things I noticed when I moved into my first house was how much it costs to waste energy and water. By making a habit out of turning off lights when you’re not in the room, turning off the central air while you’re at work, and taking slightly shorter showers/baths, you can make a noticeable improvement in your utility bills. The best thing about it is that you’re really saving “wasted” money. Your electric bill doesn’t go towards a mortgage or other item that you’ll eventually own. It’s a revolving expense that you’ll pay on regardless. I’m obviously not trying to belittle the importance of having heat and lights, but the key is taking only what you need and not paying for more than that.
5 - Use less gas
The price of gas is always all over the news, and there really doesn’t look to be any relief in sight. What better incentive to look for ways to use less of it. One of the big reasons I bought the particular house I did was the fact that it’s literally 2 miles away from my job. Some easy ways to use less gas are buying a more fuel efficient vehicle, carpooling, or using other means of transportation (bike, bus, etc). With our culture’s infatuation with big SUVs and trucks, it may cost you $80 or more to fill up. Depending on how many miles you drive on a daily basis, you could easily be looking at hundreds of dollars each month just to get you around.
6 - Stop paying fees
There are so many random little fees out there that sometimes we just don’t pay enough attention to. They might seem small by themselves, but if you put them all together they really start to add up. One of the first places to look is your primary bank. Many banks thrive on fees and you want to ensure that you’re not paying them. From ATM fees to monthly checking fees to credit card annual fees, make sure you’re not throwing away your money unnecessarily. If you keep getting charged ATM fees for using a different bank’s ATM, try to plan around your cash needs a little better, or move to a bank that reimburses ATM fees. If you continue to pay monthly checking account fees, look for accounts that don’t have a minimum balance or work harder to keep more money in your account. While you may not have the money to do it, you seem to have the money to pay the fee every month, right?
7 - Refinance to a better rate
Depending on when you bought your house or your car, you may be sitting on a fairly high interest rate. When rates go down, it sometimes makes sense to refinance and start paying less interest on your loan (and lower your monthly payment). The caveat is that you’ll have to pay closing costs which could be thousands of dollars, so you’ll have to calculate your true savings over the long term. If you plan to be there for a while, then maybe it makes sense long term and can give you some much needed relief on your monthly bill. Usually the current rate would have be at the very least 1% lower than what you’re paying, but you’ll have to analyze your specific situation to see if it makes sense.
8 - Stop paying PMI
Speaking of mortgages, maybe you didn’t have a lot to put down on your home and instead of getting a piggyback loan you decided to pay private mortgage insurance (PMI). My wife and I decided that the PMI route was the cheapest option for us on our first house, so we’re in that situation. Generally, if you don’t have the 20% to put down up front you’ll have to pay PMI. Once you reach 80% LTV (loan-to-value) you can call your mortgage company to have them stop the PMI. Some lenders require 78% LTV, while others only require 80% but won’t automatically cancel PMI until your at 78%. Remember, there are a couple ways to lower your LTV. First, each payment you make lowers your LTV. Second, if your house appreciates in value it will also lower your LTV. Most of the time a little of both can get you under that 80% plateau in a short period of time. Discuss with your lender to see what your options are.
9 - Consolidate your debt/loans
A good way to lower your payments and make your expenses easier to manage is to consolidate. The more debt you can consolidate the better, whether it be student loans, credit card debt, or any other type of debt that’s eligible for consolidation. Many times you can get a better average interest rate by consolidating, and it potentially turns a handful of payments into one every month. It’s obvious that the more you can focus on a single thing, the greater your chances at being successful at it. Consolidating also makes it easier to pay down your debt earlier if necessary as you have one account you can throw your extra money at, instead of having to choose between multiple outstanding debts. The monthly savings can be substantial, so consolidate where you can.
10 - Budget less “fun”
Hopefully you’re already putting some fun in your budget, but if you aren’t you should really consider it. Don’t get too caught up in a unrealistic savings plan at the risk of your sanity. If you do have some wiggle room in your fun budget, that’s one place where you might be able to squeeze some extra money out of. I don’t really recommend it if at all possible, just because at the end of the day spending time with our friends and families and having fun is really what life is about. But if you’re really in a pinch, analyze what you’ve budgeted for fun and see if you can make some necessary cutbacks.
As you can see by this list, most of the items aren’t very hard to do. Just like anything, we have to develop good habits that stick over time. Some of the slightest changes in our lifestyle can lead to some of the biggest gains in our wallet. While they may not seem significant by themselves, stacking a couple together each month can give your cash flow a welcomed boost. There must be a lot more creative ways to squeeze some money out of your monthly budget, and I’d love to hear some of yours! How do you find that extra cash each month?
March 17th, 2008 at 8:01 am
I love #1 and #2… these are the major offenders in my budget as well, although I have decided to just live with buying lunch at work ($3 for a 1/2 sub from subway is pretty cheap [$780 a year]), Another great way of freeing up some more money in your budget is to pay off debt, by paying off the debt you remove those pesky interest payments. That one however is easier said then done unfortunately.