According to the 80/20 rule, 80% of your spending is coming from one area of your budget. Of course most people spend the largest part of their income on their rent or mortgage. Then their car payment, utilities, groceries, entertainment, clothing, and the illustrious ‘Other‘ category.
You either fall into one of two categories:
Budgeter Category 1: You know exactly where you’re overspending and you want to figure out how to bring that down. (in which case, scroll down to Step 2, below)
Budgeter Category 2: ….OR you have NO IDEA where your money is going, just that you need to get your spending under control
If you’re in the Category 2 with “NO IDEA” then you need to do….
Step 1 – Create a Budget, Figure Out Where the Money is Going
- Compile all of your receipts, credit card bills, pay stubs, etc and create your budget. Figure out exactly how much is coming in, how much is going out (and for which category), and then figure out where you’re overspending (aka ‘finding your money leaks’).
- Use a tool like Mint or LearnVest to compile all of your account balances in one place and give you a high-level view of your entire financial situation
- Create a budget that allows you to meet your financial goals AND enjoy your life.
This last step is deceivingly difficult. Maybe you’ve done this before…. Picture it: You create a strict budget with the idea of paying off a huge amount of debt very quickly. No dinners out. No haircuts. No Starbucks. It’s great for a little while, you’re proud of all those dollars that you’re NOT spending.The Budget looks great. Savings are up! Spending is down! You and The Budget make a great team!
But then you have to start turning down invitations because of The Budget. No more happy hours. No vacations. No fun. All because The Budget won’t let you.
Soon you start to resent The Budget. Your family is also feeling it. But they are mad at YOU for creating The Budget. Soon, you’re all so miserable that you feel like the savings are not really worth the sacrifice.
You let The Budget take the joy right out of your life.
What happens next? You revolt on The Budget, go all BALLER, and overspend out of protest. You purposely ruin The Budget.
While I admire your ambition, a strict budget is hard to maintain long term without some lifestyle changes that the entire family needs to be on board with. Otherwise, what happens is that the spending is cut so severely and suddenly it causes an abrupt change that you and your family just were not prepared for.
You’re a Feast or Famine Budgeter.
Once you’ve examined your income and your current spending, then created a budget you believe you can live with, it’s time for:
Step 2 – The Great Purge
This is where you do a whole-house purge and have a huge garage sale. Everyone cleans out their closets, even the top shelf. You decide which items you really don’t want or need anymore and could go to a home where they’d be used. Every dollar made in the garage sale goes to paying down your debt. Or into a savings account. (Your choice depending on your situation.)
The Great Purge is great for a few reasons:
It clears out the house clutter that’s been accumulating, and has been physically and mentally weighing you down. You can finally stop tripping over those toys that never get used, that sports equipment in the garage, and those clothes in your closet that you never wear.
It gives you a financial jump start on your debt payments
- It provides a psychological boost to your debt pay down motivation. Just a small action creates the momentum needed to keep going
What about selling items locally on Craigslist or Nextdoor?
What about listing items on an online sale site like Ebay or Amazon?
A few more ideas to make some extra cash:
- Download and use the app Survey Mini to earn gift cards for completing surveys for stores you visit. I use this and have earned several gift cards to Kroger, PF Chang’s, and Victoria’s Secret. It also offers discount coupons to places like Michael’s and Earth Fare as a reward for filling out surveys.
- Sign up for Secret Shopper assignments. This is a good way to earn an extra $10 or $20 for shopping in a store you would go to anyway. (The Penny Hoarder has a list of reputable Secret Shopper companies here.)
- Clean out your closets and sell gently loved but hardly ever worn clothing on Poshmark or Thredup
- Sell used electronics on Gazelle or Amazon’s Trade In site for cash
Once that’s done you can get down to the business of cutting down on your spending.
Here are some suggestions for budget cuts that you’ll be able to make without ruining all your fun:
Save on Groceries
- Meal plan for the month (see how to do this here) and save money on last-minute takeout meals and pizza
Pack your lunch instead of buying it – for creative ideas on what to pack, look at these awesome Mason jar lunches
Use coupons for items you know you already use. (This kind of goes without saying, right? but don’t get so wrapped up in hunting down coupons for every single item that you waste your time in the process. Also, don’t become an extreme couponer that buys stuff JUST BECAUSE you have a coupon. Find coupons for what you need and that’s it!). Look on www.krazykouponlady.com to find deals on products you currently use.
Use a Vitamix to make your own nut butter
Make your own yogurt pouches
use grocery rebate apps like Ibotta and Checkout51
Bulk shop for pantry staples like whole grains, beans, lentils, quinoa, whole nuts, sugar, rice and pasta on sites like Amazon Pantry. Store your bulk food products in glass canisters and place a few dried bay leaves in the bottom of each container to help preserve the items in storage.
Double your recipe and cook extra to freeze meals for later
Organize your refrigerator to prevent spoiling food and wasted money
Make your own salad dressing instead of buying prepared
Make your own baking mix for pancakes or quick breads
Go Meatless on Mondays (go to www.meatlessmonday.com for ideas!)
Drink water instead of soda to save calories and money. Buy a reusable water bottle and and get a filtration system, like a Brita, and stop buying overpriced bottled water
Make your own water flavoring
Get a SodaStream and stop buying expensive soda or seltzer
Use an Instant Pot to maximize your time while cooking dinner
Make your own bread
Shop your pantry. use up the items that have been sitting in there a while that you may have forgotten about. Go to http://www.supercook.com/#/recipes and enter what items you want to use up. The site provides you with recipes that fit your ingredient list! (If you have dietary restrictions, such as gluten-free or vegan, just enter that in the Settings section of the site!)
Buy dried beans instead of canned
Save on Household Items
- Make your own ice packs (here are five different ways to do it)
- Purchase refurbished electronics. (Hint: Amazon now offers certified refurb items on their Amazon Renewed site. The items are tested and certified by qualified suppliers to work and look like new and come with a minimum 90-day supplier warranty. You can get refurbished smartphones, computers, laptops, tablets, home and kitchen appliances, game consoles, office products, and more!)
- Make your own jewelry cleaner (Here’s how!)
- Use washable microfiber cloths for cleaning
- Make your own 2nd day hair spray (xoJane.com has a great recipe here!)
- Make your own disinfectant wipes
- Shop with the season, buy things during the time of year they usually go on sale
- Use Amazon Subscribe and Save to save you the time and hassle of shopping for items you use regularly
- Use flickering LED lights instead of candles
- Make your own spice mixes instead of buying expensive premade ones (Wellnessmama.com has 14 recipes right here!)
- Make your own bath salts
- Make your own lotion bars
- Make your own shampoo
- Make your own sugar scrub
- Make your own toothpaste
- Make your own foaming hand soap
- Make your own eczema cream
- Make hannah’s miracle skin serum
Save on Shopping
- Buy discounted gift cards online ahead of time if you know you are shopping at certain stores
- Buy themed items for next year the day after it happens this year – Halloween costumes, Valentine’s Day cards, Christmas cards
- Use ebates.com or mrrebates.com and get money back on your online purchases
- Stop spending too much! Use the Krazy Koupon Lady’s stock up price list!
- Go on a cash diet – take your credit and debit cards out of your wallet and replace it with cash – you’ll be less tempted o spend money
- Use Earny to get cash back (it scans your email to find receipts and gets your cash back if it finds a cheaper price elsewhere)
- Use Snipsnap app to find coupons for in-store and online shopping
- Look at Groupon Goods
- Watch Amazon’s Lightning Deals feed to snap up big discounts that are only available for a limited time
Save on Entertainment
- Subscribe to Kindle Unlimited for ebooks
- Subscribe to Book Bub for deals on ebooks
- Buy an Entertainment book and find coupons for local attractions
- Find deals for local events on Groupon
- Use Redbox to rent movies and video games
- Cancel cable and stream your entertainment with Netflix, Hulu, and Amazon using a Firestick, Apple TV, or a Playstation console
- Get active and find a local ‘Get Started in Sports’ program near you
- Use your local library to check out books instead of buying them at a bookstore or ordering from Amazon
- While you’re at the library check out movies instead of seeing them in the theater
- Host a Moms’ Night In instead of going out. Play Bunco, host a book club, or a craft night! Need more ideas? Check here.
- Buy pre-owned games and game systems at GameStop
- Take a Staycation – explore your own town or county and find some hidden gems
Save on Clothing
- Use Rent the Runway for formal dressing occasions – outfits you’ll only wear once
- Create a capsule wardrobe and stop buying clothes you won’t wear (Don’t know what a capsule wardrobe is or how to create one? Click HERE)
- Use an app to manage your closet, like Cladwell
- Buy brand name preloved clothes on Poshmark and thredup
- Buy higher quality items in classic styles and wear them for several seasons instead of buying cheaper, trendier, disposable clothing every season
Save on Kids’ Stuff
- Use reusable snack bagsBumkins Reusable Snack Bag Small 2 Pack, Crocs & Turtle (B2)
- Make your own play-doh
- Organize a mom swap
- Buy a Cricut or Silhouette cutter and make your own party decorations
- Shop consignment sales for deals on gently used toys and clothes
Save on Transportation
- Shop around for travel deals using Expedia or Trivago
- Use the Gas Buddy app to find the cheapest gas in your area
- Order car parts online (Did you know you can buy replacement side mirrors on Amazon??)
- Maintain your car to keep it running longer! Make sure to regularly check your air pressure, change your oil, and change your air filters! (Get your air filters on amazon and change them yourself instead of paying the dealership an arm and a leg to do it!)
- Shop at stores (like Kroger and Costco) that offer gas discounts
Save on Fees
- Stop paying late fees on credit cards, set up reminders or notifications through your credit cards to let you know when the payment is due
- Cancel your gym membership and workout at home
- Refinance your home if your mortgage interest rate is high
- Evaluate your car insurance to avoid overpaying
- Use credit cards with membership rewards programs like American Express
(Because time IS money, when you don’t waste time looking for things, you can be more productive!)
- Organize linen closet with bins for medicines, first aid, baby items, sheets, pillowcases
- Use vertical storage like shelves and hooks to get clutter off the floor
- Create reminders so you never pay late fees or forget appointments
- Stack your errands to save money on gas, time, and wear and tear on your car
- Use a dry shampoo and cut your shower time in half (this is my favorite!)
- Set up a home organization station (I like this one from atcharlotteshouse.com!) to keep family members organized
- Outsource easy tasks like lawn care
- Automate home processes like bill paying and cleaning (Get a Roomba or Neato to help keep the house tidy!)
- Use a cleaning schedule to keep your home neat and tidy, stop wasting time cleaning rooms that are hardly used or seen
- Pack your lunch night before and streamline your morning routine (Psst… lunch bags don’t have to be fug! THIS ONE is adorable!)
- Set up Help Yourself snack bins for your kids
- Get into the habit of going to bed earlier and get more sleep
- Wake up earlier and be more productive before the day wears you out
- Maximize your gym time by doing more circuit or HIIT-style workouts. These workouts pack a lot of heart-pumping, fat-burning intensity into 30 minutes or less!
- Use a purse insert to save time and stay organized
- Pack emergency items, paper towels, trash bags, extra clothes, back up snacks, and water in a Car Box so you never have to make pit stops and pay through the nose for NEED RIGHT NOW items.
The secret here is BALANCE. Find a way to cut out the expenditures that aren’t adding value to your life and make substitutions where you can. You are allowed to indulge, to have fun, to enjoy yourself.
As long as it fits in your budget, meet your friends for drinks, take that weekend trip to the beach, make memories! Be responsible but don’t let it make you miserable.