Many people struggle with keeping their spending under control. This isn’t particularly surprising, since people have such ready access to money through credit cards. You need to be extremely careful when dealing with your finances. Being careless can send you into precarious position. Cutting back on expenses is one of the best ways to get back on your feet. These are seven tips to curb spending so you can fix your finances.
Make a Budget
Budgeting is the first step people should take when they need to cut back on expenses. You’re only going to get something from your budget if you’re honest with yourself and put in the necessary work to do it the right way. Here are the necessary steps for putting together an effective budget:
- Gather all financial statements. This will include bank accounts, investment and retirement accounts, as well as all bills.
- Add up your income. You’ll want to include all your sources of income. But make sure you use after-tax income. Otherwise, you’ll have a skewed view of how much money you have available.
- Total your expenses. Don’t leave anything out here. Scour through credit card bills to find out how much you’re actually spending each month. Also, be sure to include things like insurance, rent, and utilities.
- Cut out any non-essential expenses. You won’t want to do this; but it’s necessary. Find any ways you can reduce your costs—either through eliminating them or downgrading to a less expensive option.
Stop Dining Out
Dining out is an expensive habit. The average American household spends about $3,000 every year just on eating out at restaurants and on-the-go. You can save hundreds or thousands of dollars each year by resolving to prepare more meals at home.
Don’t Go Out Drinking
Getting drinks is often an even more expensive habit than getting prepared food. It’s not uncommon for cocktails to be 10 dollars or more. Even a single beer will often cost you at least four or five dollars—and more if it’s special, or you’re at a fancier establishment. You’ll save a lot of money by limiting the amount you drink at restaurants and bars.
Set Goals for Yourself
You’re setting yourself up for failure if you don’t have any hard-and-fast financial goals. After all, what’s the point of getting out debt if you don’t even want to do anything with your newfound freedom? Set short- and long-term goals for yourself. As you check off the more easily achievable ones, you’ll propel yourself toward greater heights.
You can also reach out for help if you need it. There are organizations out there—such as Freedom Debt Relief—that specialize in helping people get their finances (and more importantly their debt) under control. Just read through Freedom Debt Relief reviews on Consumer Affairs and you’ll see that they have a strong track record of helping consumers.
Wait Before Making Larger Purchases
A lot of people get into financial trouble because they’re too impulsive with their money. If this sounds like you, it’s time to instigate some rules. Wait for at least 48 hours before you make a substantial purchase. The definition of substantial will depend entirely on your unique situation. For some people it will be 50 dollars—while for others it’ll be 10.
How often are you really using that gym membership? And are you really reading all those magazines? Many people don’t realize how much they’re spending each month on their various subscription services. Cutting some of these can really free up a lot more money in your budget for paying down your debts.
Shop at Thrift Stores
Some people obsess over getting the hottest new clothes each year. But you probably can’t afford this luxury if you’re in financial trouble. People who need to cut back on their expenses should try shopping at thrift stores for clothes and other goods. You’ll be able to find many quality items for a fraction of the price that it costs to buy something new.
No two people have the exact same financial situation. However, a lot of people have problems with spending beyond their means. Consider these ideas if you need to cut back in order to straighten out your finances.