Last year I quit my job to pursue writing and blogging full time. It was a huge risk. I didn’t know when or if I would make enough money to support myself. I had a plan, but I hadn’t yet made that plan a reality. I prayed my savings would see me through, but I also knew that I needed to cut my budget to stretch that savings while I slowly built my business.
Most people don’t voluntarily leave a perfectly good job like I did, but there are many people who, through a change in circumstances completely outside their control, find themselves with significantly less income than they’re used to. Maybe you were let go, your hours were reduced, or you had to leave your job or go part-time for medical reasons or to take care of a loved one.
Suddenly finding yourself with fewer dollars in your bank account is scary. There’s no way to magically make those dollars multiply, but you do have some control over the amount you’re spending.
No matter your current situation, you can reduce your financial stress by cutting your budget. Here’s how I did it:
Acknowledge that your circumstances have changed
When I was on a full time salary, I used to have this thing called disposable income. I made money every month that I didn’t actually need to pay any bills, isn’t that neat? I could go to the movies or out to eat whenever I wanted and buy things for myself just because I liked them! It was a golden time.
When I started living on savings, though, that was no longer the case. I couldn’t buy anything “just because” anymore. I needed to hoard every dollar I could for as long as I could. It was time to develop a little thing called discipline. I stopped buying anything that wasn’t a necessity. I turned down social invitations or suggested a cheaper alternative. Was it fun? Not particularly. Was it necessary? Absolutely.
It’s okay to want things, but the sooner you acknowledge that your circumstances have changed, the easier it will be to accept it and get used to telling yourself ‘no’. Think of cutting your budget as a game. Anyone can blow through a wad of cash. It takes real skill and drive to avoid spending money.
And remember, even though your circumstance have changed, that change is most likely temporary. You won’t have to live on a shoestring forever. Get real with yourself about cutting your budget now so that you can reap the rewards later.
Follow the money
The second thing you’ll need to do to begin cutting your budget is to figure out where your money is going in the first place. If you already have a budgeting system, this will be super easy. If you don’t, use your spending records for the last month to get a simple baseline for your expenses.
Go through every category and think about whether you can reduce it or get rid of it entirely.
Cut non-essential subscriptions immediately
When I waved bye-bye to my full time salary, my Netflix account and subscription to a fitness app were the first casualties. Gym memberships, gaming apps that require you to spend money, software subscriptions, or membership fees to big box stores may need to go.
One caveat here: if the subscription saves you money, it may be worth keeping. For instance, I opted to renew my Amazon Prime account because I save so much money purchasing necessities through their Subscribe & Save feature that it actually pays for itself each year. (You can try Amazon Prime free for 30 days by clicking this link. Check out their Subscribe & Save service to see if you could be saving money on products you use every day.)
Look for ways to cut back on mandatory expenses
Just because you have to pay for a particular service doesn’t mean you can’t find ways to pay less for it. If there’s anything you’ve been paying extra on, lower that right away. I was paying a little extra toward my mortgage each month, for example.
Ways to save on monthly bills:
- Get rid of part of the service. Before I cut my budget, I was paying for internet and cable. While internet is vital for my business, cable was not. I nixed that and cut my bill by 40%.
- Explain your situation to any debt agencies you deal with, like credit card companies or student loan servicers, and see if they can lower your payment amount or interest rate.
- Try negotiating your insurance rates and your internet or cable bill. Most companies will lower your payment, at least a little bit, if you simply ask. If your company refuses to work with you, be prepared to switch to one with better rates and customer service.
- Look for ways to change your day-to-day behaviors to lower your electric, water, and gas bills. Most utility companies have helpful resources and tips on their website for lowering your usage, or will give you a discount for setting up automatic payments or enrolling in e-billing.
- Many hospitals and doctors’ offices have programs to assist or forgive outstanding accounts for low income patients. If you have medical debt, it’s worth a phone call or two.
Be relentless in looking for ways to reduce what you owe. It may take a while, but you’ll be surprised how much you can save on things you thought were set in stone.
Become a savvy shopper
Unfortunately, no matter how successful you are in cutting your budget, you’ll still have to spend some money. Some things are just necessary in order to live. But this is often the area where you can cut the most.
> Get the grocery bill under control
Start meal planning to avoid spending money on food you won’t use. Join your store’s shopper rewards program. Shop sale items and switch to store brands as much as you can. I didn’t feel like I was spending that much at the grocery back when I worked full time, but when I got serious about cutting my budget, I lowered my grocery bill by almost 50%!
> Shop around
When was the last time you priced your dog’s food? Or the shampoo you use? We get into purchasing habits, but if you take the time to compare prices, you might find the exact same product costs less next door. I bought my dog’s food from the grocery store for years before I discovered it was considerably cheaper at the local farm supply store. Also, always check different varieties of the products you use to see if those are on sale. You don’t have to get the lavender-scented laundry detergent if the lilac-scented one costs less this week.
> Do you really need to buy that?
Again, some things we buy simply because we always have, not because we actually need them. The next time you go to buy a cleaning product, consider whether plain vinegar will do the trick. Instead of buying expensive beauty products, try researching how to make your own. Paper plates and bottled water are convenient, but if you already own real plates and have running water, why spend the money? You may decide that some things are worth the extra expense, but if you take the time to stop and think about every purchase, you might find that some of your “necessities” aren’t necessary after all.
> Become a joiner
Join cash back, reward, and couponing programs. A lot of them (as long as they’re free to join). Make sure you belong to the rewards program for every store you visit regularly. Most of them don’t require you to tote around a membership card anymore; you can just give them your phone number. Even if you don’t spend enough to earn any rewards, many of them will send coupons based on your purchase history or offer you a discount on your birthday.
Apps like ibotta or Fetch (referral code = NT4TH) give you points for scanning your receipts. These points can then be exchanged for gift cards or cash. While the payout isn’t huge, you are essentially earning money for buying things that you would buy anyway.
Also, before you check out anywhere, run a quick search for store-wide coupons on your phone. I can’t tell you how much money I’ve saved with this simple trick.
Change your habits to change your bottom line
We’ve all got some not so great habits that are probably costing us money. I was a smoker at one time (not something I’m proud of and, yes, it was hella expensive). Maybe your habit isn’t so extreme: you buy fast food for lunch, or you’re always splurging on treats for your kids. It could even be something as harmless as grabbing a daily fountain drink at the local gas station.
Look at your lifestyle for ways you could save money. If you’re working, start bringing a sandwich to lunch every day. If you’ve got an online shopping problem, put down the tablet and consider starting a garden to grow your own food. Instead of taking the family out to dinner and a movie, check a movie out at the local library or pack a picnic and head to the park. Simple lifestyle changes can add up to a big spending cut over time.
You don’t have to be miserable just because you’re income has taken a hit. Truthfully, I don’t even miss most of things I stopped spending money on. Just be honest with yourself about your circumstances, look for ways to cut back, and stay vigilant about your spending habits. Cutting your budget might take a little more effort than you’re used to, but ultimately, it’s easier than you think, and the financial freedom you gain will be more than worth it.
Tell me about your favorite budget hacks in the comments! Please share this post on Facebook or Pinterest if you enjoyed it, and don’t forget to sign up for e-mails for even more money saving advice.