Cutting Back: Not Going Without

Balancing Needs and Wants

cutting-backAlmost all of us, at one time or another, have had to rifle through our finances in order to find some extra cash. It might be at the end of the month, or just days after the first monthly paycheck—no matter which, it isn't any fun. Especially when we realize that we're going to have to cut out some stuff we really like. 

So how can we cut expenses and get what we need without giving up all of the things we want? The key is in finding a balance.

The starters

The first step is learning to separate needs from wants, which is usually the part most of us struggle with. And while some stuff is pretty obvious (we need food, but want a new video game system) the problem is that fine line where the two intersect (sure, we need transportation, but want the coolest and, often, more expensive vehicle).

The easiest way I’ve found to separate them is to be practical most of the time, while using extras as a reward. For example when my wife and I quit smoking, we used part of that extra money for a newer used car (which we really did need) but that was a bit nicer (which we wanted). We then put the rest of it into savings. And if I achieve a personal goal of some sort, I treat myself to lunch instead of brown bagging it that day.

Once you change the way you look at money, you need to find out where all that money is going. You can use a budgeting app (many are available in the iTunes store and Google Play) or go old school and write it down on a piece of paper—whatever works for you. The goal is for you to see clearly where you cash is heading each month, and you might be surprised just how much some of those expenses add up over time.

From there it’s a matter of finding things that can be reduced or even flat-out cut using your new “wants and needs” filter. It’s all just a mindset.

The replacements

When looking for things to cut, remember that doesn’t mean you have to cut them out completely. After all, depriving yourself entirely won’t encourage you to keep spending smart, so just pick your spots.

  • When shopping for clothes or checking out the hardware store, go to the clearance aisle or section first.
  • Use the commissary as often as possible—a study by the Defense Commissary Agency discovered that using the commissary can save you 30% versus other stores. You’ll also want to stick to the list to reduce budget-busting impulse buys.
  • Car payments, rent or a mortgage, utilities…all of them are necessities. But that doesn’t mean you can’t find ways to reduce their impact:
    • If you rent, keep an eye out for less expensive places to live when the time comes.
    • If you’ve made car payments on time for a while, call and see if you can get refinanced at a lower rate—something you can also do with your mortgage (especially given how low rates currently are)..
    • Energy Hub estimates that you can save around 5% (or $10) for every degree you reduce or increase your thermostat in the winter or summer, respectively. So grab a blanket and consider dropping it a few degrees in the winter, and grab a fan and raise it a bit in the summer.

All of these are just examples of ways you can save some money without having to give up everything you love. 

Mark Dye

About the author: Mark Dye

Mark Dye has been writing articles, recording podcasts, and putting together books on personal finance for nearly a decade. His work has been recognized by the American Bankers Association and the Institute for Financial Literacy, and received an 2011 APEX Grand Award for Writing. Follow Mark on Google+.

Contact: Mark Dye


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