Whether you’re managing on a smaller income or simply looking to better manage your budget, cutting expenses can be challenging. Even if you’re already closely monitoring with your spending, there may still be costs you can cut.

To get started, track your spending for a month and then determine whether each item is a fixed, variable, or discretionary expense. For each type of expense, there are different steps you can take to try to cut back:

Fixed expenses

A fixed expense has a regular dollar amount month to month, such as mortgages, rent, and certain other expenses. While moving might be a significant change, changes to other fixed expenses can add up.

Ways to cut:

  • If your apartment has more space or amenities than you actually need, moving to a smaller and more affordable space can make a significant impact on your budget.
  • Check the details of your auto insurance policy, such as how much you expected to drive each year. If you're paying for more than what you actually drive, consider revisiting your insurance needs and shopping for a new quote.
  • If you have a smartphone plan, consider whether your plan has more services than you actually need. Switching to a more economical plan may provide you with a more affordable price and still get the services you need.

Variable expenses

These expenses vary based on your usage, such as grocery costs, utility bills, and transportation.

Ways to cut:

  • If you drive to work or school, consider carpooling, biking, or taking public transportation. Working remotely, if possible, can reduce these expenses.
  • Try to reduce your energy costs by limiting your air conditioning use in summer and turning down the thermostat in the winter.
  • If you have both a landline and mobile phone, consider whether discontinuing the landline is an option for you. If your mobile phone bill varies because of data overage or text message charges, consider changes to your mobile plan that might lower your overall bill.
  • Take a look at how much you typically spend on groceries during a week or month. Try different ways to manage your spending, such as bringing a shopping list, to help focus your grocery cart on items that you need.

Discretionary expenses

These expenses include anything based on personal wants and needs, such as clothing, entertainment, and restaurant expenses.

Ways to cut:

  • Take a look at your spending on movies, hobbies, sports, or other entertainment. If you're paying for multiple streaming entertainment systems, consider eliminating services you don't need, even if just stopping them for a period of time to see if you miss it. Revisit your daily routines and spending. For example, if you’re buying a $4 coffee drink each morning, that adds up to $1,460 each year.
  • Track how much you're spending on take out or delivery services in a month. Consider having more meals made at home as a cheaper alternative.
  • Try to reduce the number of personal services you pay for. If you can do your own lawn care, manicures, or other personal care, you may be surprised by how much you’ll save.

Cutting expenses can involve major lifestyle changes, but also modest adjustments in how you spend. Avoiding overspending can also help you achieve financial success in the long run.

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