How to Cut Expenses without Losing Your Quality of Life

Before you can cut down on your expenses, you need to examine how much money you spend per month. Begin by compiling a spreadsheet listing all of your monthly bills and expenses; then, list all of your income. Subtract one from the other with the goal of having your expenses add up to less than your monthly income. Compare the amount of money coming in to how much money goes out on a monthly basis and track any differences.

Once the core expenses are known, the next step is to stay on budget, and give each member of the family an “allowance.” This can help to make financial accountability every family member’s responsibility. With a clear view of the total financial picture, decide which items can be cut down or cut out altogether.

Minimizing Some Expenses

For short term savings, some expenses to cut out may include:

• Extra cable channels or movie packages that are not regularly viewed
• Eating out, for both lunch and dinner
• A landline telephone, if everyone in the family has a cell phone and you have high-speed internet service.
• Extra services for your cell phone that are not used
• Renting or buying CDs, DVDs or books. Check your local library, as many libraries now have DVDs and CDs for free rental (subject to late fees)
• Hidden insurance expenses. Look for discounted rates on car loans; a mortgage for which a term plan large enough to pay off the mortgage is cheaper; and crossover plans, i.e., car insurance policies that also provide medical benefits to those with a current health insurance policy who are involved in an accident.
• Credit cards. Using a debit card will help you track your expenses more easily and you won’t incur high interest rate fees.

Ways to Use Less

Cutting down equates to using less. This is also a good way to work on “living green.” Here are some ideas:

• Use one cleaner, like vinegar, instead of five or six to clean floors, windows, doors, and hard surfaces; and don’t forget the benefits of baking soda for laundry, freezers, and refrigerators instead of chemical fresheners.
• Carpool—not just the kids, but the whole family. Make a list of what each member needs or wants to do on the weekend, and then plan to encompass all or most of it with one car and one or two trips.
• Turn off the lights, television, computer, stereo, or other electronics when they are not in use. Make TV time “family time”, where only one television set is on and everyone watches the same program. Or, use a DVR recorder to catch everyone’s favorite shows; you can zip through the commercials to save time while cutting down on temptation to buy items you don’t need.
• Make a grocery list, with a menu, and plan on which stores to buy certain items at, making one round trip to save time, money, and gas. Don’t forget to compare prices between coupon and non-coupon offers. Sometimes the coupon items are still more expensive because they are a brand name, versus a lower priced non-name brand item.

In the Long Run

• Buy better quality for less. Many high-end retail stores sell electronics, furniture, clothing, and other items on sale for less than or equal to the lower end retail stores. Better quality may mean it will last longer and need to be replaced less often.
• Shop or compare prices and quality on the internet; the internet provides a larger selection, and shopping online saves time and gas compared to going from one store to another. Consider buying online if the delivery charge is less than or comparable to buying locally.
• Make a weekly or monthly menu; cook extra for the next day’s lunches or freeze portions for fast and easy meals later. Fast food chains usually cost more in resources and waistlines than a quick meal at home.
• Reuse, recycle, or use differently. Expenses can be cut by using supermarket plastic bags as trash bags; by using the funny pages of the local newspaper as gift wrapping paper; by filling a half-gallon water or soda bottle with water and putting it in the toilet tank to save water each time the toilet is used.
• Buy high efficiency Energy-Star appliances when replacing older appliances. This should save you money on gas and electric bills in the long run, even if they are more expensive in the short-term.

Additional Resources:

• U.S. Department of Energy, Energy Savers:

http://www1.eere.energy.gov/consumer/tips/

• FTC, Saving Money at the Gas Pump

http://www.ftc.gov/bcp/edu/microsites/energysavings/savegas/flash.html

• FDA, Saving Money on Prescription Drugs:

http://www.fda.gov/fdac/features/2005/505_save.html