This article originally appeared on The Financially Independent Millennial and was republished with permission.
Living paycheck to paycheck is stressful! Or maybe you earn enough but want to aggressively save up a deposit for a home or to pay off high-interest debts quicker. In this article, I'll cover extreme ways to cut expenses.
The first thing you must do to get into a better financial position is cut expenses. If your situation is dire, then making extreme cuts to your expenses is the best way to quickly gain financial stability.
Whatever your situation is, be sure that these 6 extreme cost-cutting expenses are ideas that anyone can follow.
Once you've tried them out and your financial situation improves, you may realize you didn't even need these things in the first place! This could be the start of a lifetime of saving and only spending money on things that you really need.
You know you need to change your habits to achieve your financial goals. Before you make any cuts there a couple of things you should do first. By taking these preparatory steps you are setting the foundation for your future success.
The first step is to decide what your goals are. Knowing what you are working towards makes it much easier to stick to your financial plan. Make sure to set both long-term and short-term goals.
Short-term goals might include being able to afford a new car, paying off some debts, or a vacation.
Long-term goals could be paying off all debts, buying a home, or building an emergency savings fund.
Only you can decide what your goals are going to be. Make sure to have some short-term goals because every time you tick one off you will benefit from that awesome feeling of achieving something that you wanted to.
There is no better way to stay motivated towards your goals than by achieving some of them along the way!
Now you've set some goals the next thing you must do is create a budget.
A realistic budget is essential to achieve your financial goals. Make sure to list every single expense you have to the exact cent.
Once you can see exactly where all your money is going you can start to trim your expenses. Every cent you can save means you have money to use elsewhere.
You could add the extra money to your savings or investments, pay off debts quicker, or have more disposable money for day-to-day living.
Whatever you want the money for by having a detailed budget along with making the 6 cuts to expenses I will tell you about in a moment will mean you reach your targets quicker.
Now that you've set your goals and created your budget you can take the next step and make these 6 extreme cuts to your expenses. By following this advice, you will have more of your money available to use elsewhere.
How much do you think you spend a year on car costs? The average consumer in America spends more than $9,000 per year on buying and running a vehicle. That's $750 a month you could be saving by giving up your car!
Give it some serious thought–could you get to work using public transport? Is walking or cycling an option?
Think of all the payments you make relating to car ownership. The monthly car payment, insurance, repairs, gas, maintenance, taxes, and vehicle registration could all be saved!
Depending on where you live it may not be practical to not have a vehicle. You could still make savings though by switching to a cheaper vehicle or only using it when you must.
Walking or cycling as much as possible not only saves you money, it also helps you be healthier!
Consumers spend as much as $1000 per month on food alone! That includes both groceries for the home and eating out. Cutting the food bill is a great way to save lots of money.
Start by limiting how many times you eat out a month. Even just 3 or 4 nights out a month can add up to over $200. Instead, make more meals at home. If you have like-minded friends, you could try taking turns hosting meals for each other to recreate a dining experience.
The average consumer in America spends $53 a week just on lunch, that's almost $3,000 per year! If you can, make your own lunch every day and potentially save. Plus, you will always know what you're eating, and it will (hopefully) be healthier for you!
These two extreme changes are already saving you nearly $5,000 a year. To save even more, you need to make cuts to your food bill for the home.
Start by planning your meals and based on that plan create a shopping list. Doing this means when you go grocery shopping you will only buy what you need. Not only does this save you money but it cuts down food waste as well!
If you normally buy expensive brands, try switching to less expensive food. Quite often they taste the same!
All these changes combined should see your food bill drastically reduced.
To say children are expensive would be an understatement. Recent estimates report it can cost over $284,000 to raise a child to the age of 18. That's not including college!
If you get your kids to earn their own money this could help alleviate the stress on your budget.
No one is saying you should stop paying for them. Clothes, school supplies, food, and other necessities are still your obligation.
However, if your child earns their own money, they could use it to pay for entertainment, luxuries, or add it to their college savings. This means you aren't having to pay for everything!
As a bonus, your child can also learn about managing their own money and the satisfaction of earning something themselves. Hopefully, these lessons will give your child a better start when they reach adulthood.
Jobs for children these days are hugely diverse thanks to the internet. Babysitting or paper routes are still options. Chat with your child about their skills and search online for suitable ideas.
Another tip for parents is to search online for free books. There are lots of ways to get free or cheaper books either for leisure or school. This can save hundreds of dollars a year as books, especially school textbooks, can be expensive!
Consumers could save an average of $500 a year by canceling subscriptions. Go through each subscription or membership and think about the alternatives.
If you have a gym membership could you work out at home instead? Could you find content to watch for free rather than pay for a streaming service? Do you need that magazine subscription, or could you find similar content to read for free online?
On average, consumers in America could save as much as $100 a month by canceling cable. That's a lot of money!
If you enjoy watching TV, then look for free alternatives to keep up with your favorite shows. It will be hard at first, but you may find you have time for other things now. Many people spend hours a week watching TV. With all that free time you could start a new hobby, read more, or take on a side hustle!
Moving to a new house isn't easy, especially if you have a mortgage. However, if you can move, you should give it some serious thought.
Finding a cheaper area to live in or a smaller home can save you money. If you can move closer to work, you could save money on commuting or even give up your car and walk to work!
If you have a mortgage, then try to negotiate a better deal the next time it's up for renewal. Renters could ask their landlord for a rent reduction when the agreement is due for renewal.
Anything you can save on housing costs will be a fantastic boost to your budget!
The 6 methods listed here are all extreme ways to cut expenses if you follow them to the fullest extent.
Not all of them will be possible for you and you may prefer not to go the extreme lengths described here. However, even if you only follow some of the advice, you could still be saving.
Start by setting your goals and creating your budget. Next, go through each point given above and cut your expenses as much as you can. Sticking to this plan means you will achieve your goals!
