No matter your income, it’ll always be a goal reducing expenses and saving more money. But, no one wants to spend less on activities they enjoy doing like going out to a nice dinner or going shopping. So what are some ways you can reduce your spending to allow yourself more money for the things that bring you joy? First, I highly recommend checking out this blog post by David Ramsay who offers some practical steps. In addition, below I introduce 7 tips that will guide you in lessening your expenses in a meaningful way.
Saving Money Tip #1: Automate Savings
The best way to cut your spending is to not have your money be accessible in the first place! Set up automatic transfers to your savings account to ensure your money is stored away before you get the chance to spend it. You’ll find yourself forgetting about this money and only using whatever money you have leftover.
Saving Money Tip #2: Track your Expenses
Tracking what you spend money on forces your brain to think twice before buying something unnecessary. For example, if I’m thinking of ordering food and notice that my last three expenses have been Uber Eats, I hesitate before spending money again. This is especially helpful with minor expenses. Because on the surface, a $3.50 coffee won’t seem like a big deal. But, as you track your expenses, you may realize that this little coffee costs you around $200 a month! As you become aware of how your small expenses add up, your brain will to hesitate before impulsive spending.
Saving Money Tip #3: Don’t give yourself the chance!
If you have something planned with friends, show up with a predetermined amount of cash that you feel comfortable spending. You can always say “I can’t do another round of drinks, I only brought $30 with me”. Restricting yourself to only use the money brought will dissuade you into spending more than you feel comfortable.
Saving Money Tip #4: Meal Prepping
Meal prepping is the act of preparing all your food for the week ahead of time. One way meal prepping lessens expenses is that it allows you to buy in bulk. Buying a large quantity of groceries is cheaper. Also, meal prepping requires you to plan meals ahead of time and plan a list of items needed during your next grocery haul. So, when you arrive at the grocery store, you already know what you need to buy. Creating a grocery list based on your planned meals will help you avoid impulse purchases at the grocery store.
Saving MoneyTip #5: Create a Reward System
I’m a big believer in creating rewards to entice us to stick to a goal. In this case, reward yourself when you have done the right thing with your expenses. For example, I have this rule with myself that if I don’t spend money on takeout food for a month (my guilty pleasure), then I will treat myself to takeout. Choose whatever reward motivates you to stick to your goal of expense reduction.
Saving Money Tip #6: Don’t Keep Up with the Joneses
“Keeping up with the Joneses” is a phrase referring to those who try to “keep up” with the latest materialistic trend. Keeping up with the Joneses means spending money on things because others have them. This is especially prevalent in today’s age of social media, where there is an plenty of lifestyle comparisons. It’s tempting to want the trendy thing that everyone else has, ranging from apple watches to air jordan basketball shoes. Heck, who knows, even a water bottle can start trending online! This is a classic trap many people fall into. Getting into this trap of comparing materialistic things. Lesson being, avoid buying things because others have them. Don’t make impulse purchases, and instead ask yourself why you want to buy something before you buy it. If it’s to keep up with the latest trend, you will likely regret the purchase when the trend is inevitably over.
Saving Money Tip #7: Plan Things Ahead of Time
Wealthy people often have the privilege of paying for convenience like flying private to avoid airport hassle. On the middle range of the wealth spectrum, you can pay for convenience by ubering long distances to avoid public transit. For those attempting to reduce spendings, you must not pay for convenience. Instead, you should plan things ahead of time so that you are not in a position to have to pay for convenience. Here are a few examples: you can pack a budget friendly lunch for your hiking trip to avoid stopping for food on the way. You can shop around for cheap gas stations rather than being stuck at the most expensive gas station. These things seem like small expense reductions, but they add up as fast as the coffee from tip #2!
Summary
A lot of the ways to reduce expenses are minor changes that reduce impulse purchases. Even though the changes seem small, they compound over time and make a difference in the long run. Once you have a grasp on your expenses, check out this blog on saving money for retirement to learn why it’s important to start saving early.