How To Cut Your Budget When You Think You Can’t

It’s no secret we all need a budget to help us stay on top of our financial goals. Whether you make $10.00 or $100.00 an hour or more, it doesn’t matter. Everyone needs to make a budget based on their income and offset by their monthly expenses. First, write down the income you bring in after taxes. If you are 1099’d, set aside enough money to pay your taxes when you get paid, not a year from now. I’m updating this post from September 2018. Budgeting is still the name of the game. Savings Envelopes

Let me explain if you don’t know what a 1099 form is. Some people, such as independent contractors, are paid the whole amount due to them for their services without having any taxes taken out of their paycheck. Yep, if you’re one of those people, you need to plan and be ready to pay those taxes when they are due. Set up a savings account now and set the money aside. And while you’re at it, set up a savings account for you and your family for other things, like a vacation, college fund, funds to cover co-pays for medical expenses, etc.

Savings Account

Wait, you may think there is no way I can put any money in a savings account right now. When Mark and I were first married, he was in college, and soon we were expecting our first child. We both agreed that I should be home with our baby girl. We also realized it would take some work to cut our expenses because I would no longer have a paycheck.

I decided I could use my sewing machine. If people needed something sewn, I could do it for a small fee. I also took in ironing—wow, no one irons much these days. Then, I babysat for mothers in the neighborhood who needed someone to watch their kids. It was hard, but I knew I didn’t want to work outside the home. I also love children, so I was anxious to help other working mothers.

Mark worked an extra night job or two, and we could soon see we could do it. Yes, it was hard work, but it was worth it. And we put him through school without any student loans.

Your Personal Finance Goals Are Critical

Inflation over the past few years has been hard to deal with. A lot of money is being spent on food and housing. With the increase in the cost of home ownership, those mortgage payments are keeping many of the younger generations from buying a home. Interest rates have been kept high by the Federal Reserve in an effort to fight inflation. Hopefully, we’ll see lower interest rates this year and going forward.

Just like I’ve told my readers to have an emergency plan in place for food, water, and many other things, it’s also important to have goals and plans set up to protect your financial situation now and in the future. A family budget is one step in making that plan work. Only we can control our spending habits and make sure impulse purchases and unnecessary transactions don’t make it hard to cover our fixed expense items and normal household expenses each month. Putting together a formal budget on paper makes sense. If you have computer skills, an Excel spreadsheet is an effective way to put things in place.

1. Put Your Budget Into Written Form

I wish schools and churches would teach our youth how to make a budget and put it in writing like a roadmap. This is where we are right now and where we want to be. We have all heard the statement you can’t squeeze blood out of a turnip; I get it. Seeing things written out makes it easier to visualize, understand, and remember how the numbers come together.

2. Find A Way To Bring In More Income

So, we must make tough decisions: where can we cut expenses, and how can we bring in more income? It’s as simple as that, or is it? It’s hard to think about getting another job or cutting our cable, internet, or gym membership bill.

3. Write Down Expenses and Income

First, don’t be harsh on yourself; this will help the entire family learn to live on less and work harder. It’s okay, you can do this, I promise. I’m going to list a few places where I could cut expenses. Please write down your income as I mentioned above. Grab a piece of paper and write it down. Now, write down all of the expenses you’ll face this month. Of course, our rent or house payment will be the first to pay, and then our utilities. Then list your car payment, car insurance, homeowner’s insurance, food, clothing, school loans, etc.

4. Set Up A Savings Account

Please set aside at least $10.00 every paycheck for your savings account as a starting point, more if you can afford it. You won’t miss it if you set it up by automatic payment. Please start small and it will add up faster than you think. You can skip eating out or your soda pop run. In the end, having a few bucks in the bank is fantastic!

5. How To Cut Expenses/Wants or Needs

This is a long list of ideas to help you cut expenses; they may or may not pertain to your situation. But we need to think out loud about how to cut our spending.

1. Put money in envelopes to help you budget for groceries, haircuts, clothing, eating out, medicine, Doctor/Dentist visits, and dog grooming (for gas, I use my debit card)
2. Cut your own family’s hair
3. Eat at home every meal, if possible (consider sending a sack lunch with the school kids unless school lunch is cheaper)
4. Cook from scratch
5. Stay out of stores unless you really need something – then use a shopping list
6. Turn lights off when you leave a room to reduce your electricity bill
7. Keep the blinds closed on those hot days to help with utilities – get a programmable thermostat and adjust the temperatures for when you’re home and when you’re gone
8. Unplug electronics and small appliances that are drawing electricity when not in use – run your dishwasher, washing machine, and clothes dryer less often. Wait until you have a full load
9. Skip the pedicures or manicures
10. Stay away from the corner soda pop stores
11. Do you have a landline and a cell phone, can you cut one?
12. Get a clothesline and hang your sheets to dry to save on natural gas or electricity
13. Can you cut your entertainment expenses?
14. Can you downsize your house or apartment or get a roommate for that spare bedroom?
15. Cut your food bill by growing a garden
16. Cook less expensive meals – look for store-brand items rather than name-brands
17. Pack lunches with leftovers; even you and your spouse can take lunch to work
18. Buy little if any, convenience foods
19. Make your bread
20. Can you trade your car in for a less expensive car or truck?
21. Use coupons wisely, sometimes you can get a gallon of milk if you buy a box of cereal
22. Watch for meat that is slashed in price – many store discounts are available with coupons
23. Watch sales and shop at cheaper stores, if possible
24. Ditch cable or cut it way down if possible; look at Hulu and Netflix
25. Skip the monthly subscriptions to magazines
26. Go to the library and get movies, hard-copy books, or audible books
27. Use cash whenever possible; when it’s gone, it’s gone
28. Track what you spend, and write down everything you spend money on
29. Sell items in your house you are not using or may never use (extra income) it also makes you think twice about spending money on things you don’t need
30. Cash is self-control; it takes some work but is so worth it
31. Have fun going on cheaper dates
32. Cut lessons if you can’t afford them
33. Get help if you can’t afford groceries; food stamps are there for short-term use to help people.
34. Save gas in your cars by planning those trips to town, combining all the errands into one trip
35. Janet a reader suggested: “Another thing is that after you pay off the car, keep it longer than you might have in the past, and put the money in a savings account for when you buy a new car. Cars depreciate so much. It’s the worst investment you can make, but it’s necessary.”

6. Budget With Envelopes

Leanne reminded me to set up equal pay with monthly utility bills. I have always done that, and I take it for granted. It’s incredible because there are no surprises like high bills!! Often you’ll pay less if they can take the payment from your account automatically.

Groceries

$50.00 dollar bills (set your budget and put large bills in your envelope); if you go to the grocery store, you put the change in your grocery envelope. For instance, if your budget is $300.00 and you spend $80.00, you place the remaining $220.00 back in the envelope for the next grocery shopping day.

Haircuts

$5.00, $10.00, and $20.00 bills, fill the envelopes tagged with each person’s haircut. For instance, Mark’s haircut is $25.00, including a tip, so I put $25.00 in one envelope. My haircut is $60.00 every four weeks so I have two envelopes, one for Mark and one for me. My envelope has $60.00 in it.

Clothing

$20.00 bills (set your budget and stick to it) Once you realize how much you are spending out of your envelopes, you will cut back big time because the cash is gone. It’s hard in the beginning, but you can do it.

Get Out Of Debt – Have a Debt Management Plan

Pay off your car immediately, and buy a cheaper car if necessary. Get by with one car if you can. Don’t carry any credit card debt. If you have credit card debt, pay more than the monthly payment. Debt owns you. Don’t buy stuff just because you want it; consider what you need.

If you have a lot of high interest rate debt consider a debt consolidation loan. With rates anticipated to drop over the next year, consider a variable rate loan so the payment will go down over time.

Final Word

Please let me know how you have learned to cut expenses and cut your budget. I would love to hear your thoughts and ideas. We learn from each other. May God bless you and your family for being prepared for the unexpected. Staying out of debt makes us more self-reliant. We can cut our budget even when we think we can’t. Linda

Copyright pictures: Piggy Bank: AdobeStock_79298456 by Rob Hyrons, Budgeting with a Calculator AdobeStock_189738154 By Andrey Popov