When attempting to balance our budgets and manage our money, we tend to look for the quick fixes, the things that we can do without having to inconvenience ourselves too much. This 1-2-3 approach is definitely not a quick fix but are fixes that when implemented will help you balance your budget and become better money managers.
1. Cut Expenses
Cutting your expenses is a critical first step to managing your money. When your budget is out of control, the fastest way to reign it back in is to cut expenses. For many this is a very difficult first set to make because it requires sacrifices and going without things that we have grown accustomed to.
Places to start cutting expenses:
Cable/Satellite
I make more enemies than friends whenever I suggest this to others, but truthfully, for many this is a huge expense they simply cannot afford. If you are paying upwards of a $100 or more every month for cable or satellite and only watch a third of the channels available to you, it is time to figure out how you can lower this bill. Call your provider and switch to a smaller package, suspend your account for a few months, or simply cut cable out altogether.
We have not had cable in over eight years and we do not miss it. We still watch sports at our neighbor’s house, still watch great shows thanks to Netflix and Amazon Prime, and we still know what is going on in the world thanks to Facebook. Your world will not end if you cut the cable.
Utilities
You have heard it before and it bears repeating; call your utility and insurance providers at least once a year to negotiate lower rates. Many have asked me after seeing our one income budget how we keep our gas (winter heating) costs so low and one way is that we have a fixed therm rate that we re-negotiate every year. You can save a potential $500 a year without changing your lifestyle by simply calling your providers and renegotiating your rates or by switching providers entirely.
Clothing
Many people spend more money in this category than is necessary and some people make the frugal vs cheap mistake of purchasing too cheap clothing that will not last the entire year. I am a firm believer in consignment shops and thrift stores for clothing. In fact, I have not paid for any of the new clothes we have bought by selling our old clothes to consignment shops and then using that money to purchase new clothes. If you are trying to control your spending habits, make sure you are aware of how much you already spend in this category and determine if you are spending more than you should. Find alternative ways to score your family’s clothing for free or nearly free and make sure you are not just purchasing things that are on sale without having a real need for the item.
Groceries
This is typically the largest variable expense a family has, the grocery budget. The first step to controlling this expense is to determine if you are overspending in this category. Are you throwing out food every week? Do you have dozens of canned goods in your pantry? What are the meals that you make most often? Are you simply purchasing something because it was on sale or you had a coupon? These questions will help you determine if you need to scale back how much you buy every week. If you have several items in your pantry and freezer, consider skipping a week and use what you have on hand. Consider using methods like speed shopping and a make or break price book to keep your grocery budget low.
2.Earn More Money
Once you have cut your expenses, if your budget is still not balancing, the next thing you should do is earn more money. This does not have to be in the form of a second job (if your budget is really out of control, a second job is the best option until you regain control) but can be in the form of making money online or working a side hustle like a blog or freelance career. You do not have to work to earn extra money for forever, set a goal to meet (like a debt to pay off or a certain amount to be added to savings) before you can stop your extra hustle to keep your eye on the prize.
3. Monthly Audit
You should review your budget and spending every month. Audit your budget and see if there were any mistakes, why you were over/under budget, and how you can better prepare next month. It is essential that you go over your audit with your significant other. If you share money, you need to be on the same playing field when it comes to the budget. If your significant other works 80+ hours a week like my hubs, email communication can be a wonderful way to communicate your budget with each other. Find a way that works best for you and stick to it.
Building a budget that works, takes work and managing your money takes even more work. I know that I have failed more times than I can count at managing my money, but it is not how many times I have failed that matter but rather how many times I have gotten back up and tried again that count. Without work and effort, your budgets and money will never work for you.
What are ways that you keep your budget balanced?
Linked Up To: The Thrifty Couple, Thrifty Thursday, Fellowship Friday, Frugal Friday
Great tips! My husband grew up without cable and so we have never had it since we’ve been married. We have a digital antenna that picks up 15 or so channels including ABC, CBS, NBS, FOX, The CW, PBS, etc. It’s always amusing to me when I tell people the channels that we get for free because they had no clue you could get these channels for free!
I miss having an antenna so much! I got us one when we moved but unfortunately we live in a semi-rural area and we only two channels that weren’t worth the price of the antenna. 🙁
We are trying to be more frugal and also earn more money. Since we both run our own small businesses, it’s something we can do. Sure, it’s not easy to earn more, but at least we don’t depend on someone else giving us a bigger wage for instance.
These are great tips. I think I make more enemies too when I mention cutting cable. But I remind them that my husband is a HUGE football fan and that we live in Alabama where football is our state religion and if HE can live without it so can they. Also, there is just a bunch of crap on there I don’t want my kids to see.
So true Lydia! It makes censorship a tad easier when it comes to monitoring what our kids watch.
I only go shopping for clothes at thrift stores or places that sell clothes for ridiculously cheap. I have noticed if I ever do buy anything a bit more expensive, I take care of it better.
I always recommend energy audits if you want to cut your power bill. My husband did ours using a cheap unit he bought at Aldi’s to tell us how much energy every single appliance in the house was using. It was amazing how much energy we were wasting. A few very simple changes and we more than halved our energy usage, resulting in much lower bills.
Here, energy is billed quarterly. Our last bill was about $105. Half of that was the service fee. (By law they can’t charge you more for the service fee than they charge you for electricity, which means we often get a discount on our service fee because our electricity usage is so low.) Based on that bill we pay about $1.15/day for power (including usage and service fee.) While I suppose I could save $1.15/day by not having electricity, I think it’s a reasonable price to pay for the convenience!
That is an awesome tip Becca! Thank you so much for sharing! 🙂
We’ve been cable free for a few years and think it’s the easiest way to save money. My husband even took an old computer (just the desk top unit, not the monitor) and hooked it up to our living room TV with a wireless mouse and a wireless keyboard. Not only can we watch any current TV shows through the network websites, but I can surf pinterest or blog from my couch.
Oh I love the idea of blogging from my couch! That is awesome – what a handy hubby!
I love not having cable! Not only does it save us a ton of money every month, it always pushes me to read a book, play games, or go outside and be active. Our antenna definitely helps though so I can watch the news in the morning. We might even try slingtv so I can get some hgtv once and a while!
Great tips! I love the simplicity of the 1-2-3. It makes it less overwhelming for some!
Love these tips! I think #1 is key, and an area where a lot of people don’t think they can cut back. Really there is almost always SOMETHING you are spending money on that you don’t have to.
Stopping by from Fellowship Friday
So true Misty! 🙂
I did many of these, maybe all of them when I was getting out of debt. I cut my cable bill in half and even after I got out of debt, I never went back to my old cable selections. There’s never anything on tv any way! I also got an energy audit and recommend it. You save winter and summer. Stopping by from Frugal Friday! Thanks for the tips.
We found that we hardly watch TV at all, and having 99 channels of “nothing much to watch” is unnecessary.
We are also hoping to go with a celluar “home phone” and cut the landline. We also have hotspot, and the public library for us to do internet as well as DVDs, audiobooks, etc.
We think it’s shopping “uptown” to go to Goodwill, and since I’ve finished my online work for my Bachelor’s degree, we cannot justify all the costs compared with being able to be mobile. For some it’s about paying for a vacation, nice clothes, etc. For us it’s about surviving on less than $850 a month.
Thanks for the site, and blog-resources…and comments. 😉
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These are great tips! We implemented a similar system when we began our debt free journey, and we still stick to many of the same principles. Thanks for sharing! Pinning! 🙂
Thank you for sharing Leesha! 🙂
We have recently cut the cable cord. We’ve have netflix and have signed up for hulu plus. The husband wants to get amazon primes as well, but I’m not sure we need it just yet. We’ll see though. We’re also going to be changing our cell phone carrier. We were quoted one price and then all of the sudden it’s $100 more/month? No thank you. We’ll find someone else for much, much less.
AT&T did that to us when we had them. I’ll never understand where cell phone carriers get all those “extra” charges from! Amazon Prime is great but I believe it is only worth it if you use Amazon and make several purchases from them.
I love your comment policy! I have a similar one that I enforce. It just makes things so much easier and nicer for all involved. Thank you for working hard behind the scenes to provide a great place for everyone to feel welcome at. 🙂
Awe, thank you so much Sarah! 🙂
You make a good point about reducing packages for satellite and cable. Some homeowners are finding HDTV antenna usage to be a good alternative. Yet, reducing the package as a whole can be just as viable an option and worthy of comparison.