How to Cut Expenses
If you’re just starting out your journey to financial freedom, you’re probably feeling a bit overwhelmed. You might feel like there is nothing to cut from your expenses and have no idea how you’ll ever get ahead.
I promise you, there is a way. You have to do the work, but there is a way to get ahead, stay ahead, and start building wealth.
First, start with beginning to change your mindset around money. Make your budget and track your expenses to see where in the world your money is going each month. You can subscribe to my newsletter to get a free template to help you do this.
Once you have done your budget and are tracking your expenses, then you need to follow these 3 steps to cut expenses from your budget.
First Step to Cut Expenses
Once you have budgeted your money and tracked your expenses, you need to determine where all of your money is going each month.
See what areas you can easily cut out to free up some money in your budget. Do you buy coffee out every single day? Try bringing your coffee instead. It seems small, but a common problem is when small purchases add up over the course of the month turning a small daily expense into a large monthly expense.
Once you go through and find easy areas to trim out quickly, continue on with your month as normal. You don’t want to cut expenses all out at once because you will be forcing this change rather than settling into it.
Remember, you want to create new habits to make a life long change, not cut expenses to bare minimum and see how long you can go. There is a time and a place for that, like when you you’re challenging yourself to a no spend month.
Second Step to Cut Expenses
Once you have cut expenses that are easy, start thinking about what your priorities are. What do you find value in?
The best part about budgeting is that you get to tell your money where you want it to go. Have it go to what you value the most.
You’ll start realizing that some purchases you don’t find much value in and you no longer want to spend the money. Cut those expenses that aren’t valuable to you or bring you joy.
By cutting these expenses, it will allow you to free up money in your budget to go where you want it to.
Third Step to Cut Expenses
This can be challenging and requires another change in mindset, which is why it’s the last step I include. This can potentially be the hardest part, especially if you’re just beginning.
This also could be the easiest part for someone, it all depends on where you are in your mindset and how willing you are to change your lifestyle. .
Look at the expenses that you have to make each month and think about creative ways to make these areas more affordable.
Personally, I don’t find much value in where I live. Give me a bed, bathroom, kitchen, and somewhere to store my clothes and I’m good to go.
This is why I decided to move back home in order to pay off my $200k in student loans. The amount of money I can put towards my debt, about 75% of my income, while still investing and saving, makes it worth it.
Another area would be groceries, we need to eat, we can’t cut groceries from our budget unfortunately. But, we can choose healthy, budget friendly foods instead to lower our expenses.
Ultimately, this all comes down to finding what you value and what you don’t value in your life. by following these steps to eliminate the low value expenses, you will find more money in your budget to put towards the things you value and are important to you. What has helped you to cut expenses?