Ways to Cut Your Monthly Expenses

Everyone has expenses and every month a major portion of our earnings goes to paying these expenses.  If we are lucky we have a little bit of our pay left over at the end of the month to put aside in savings.

However, many are not that fortunate and end up with nothing left over or, worse, not enough to cover all of our expenses.  

The best way to get out of the trap of either just having enough money to meet all of our expenses or having to borrow just to cover our expenses is to find ways to reduce our expenses.

The first thing one has to do in order to cut expenses is to take a close look at our income and expenses and identify exactly where our money goes.

Our spending can be divided into two categories - fixed and discretionary.

Fixed expenses are those that we cannot avoid. Things like payroll taxes and other deductions taken from our pay before we receive it. Generally there is not much we can do about these.

However, in the case of income taxes, one can check to see if we are over withholding (i.e., having too much taken out) and, if this is the case, a person can reduce their withholding on Federal and/or state income taxes (but, be careful not to reduce this too much as there are penalties for under withholding - be sure to stay within the law here) thereby increasing one’s take home pay.

Also, if your income is low and you are among those who qualify for the Earned Income Tax Credit (i.e. at tax time you not only get all of your Federal Income tax withholding back but also get an additional negative tax amount in which the government gives you back more than you paid) you can check with your employer and arrange to receive this Earned Income Tax Credit in the form of installments in each pay check rather than a lump sum at tax time.

Other things like rent, mortgage payments, car loan payments, credit cards, etc. not only have to be paid but the amount is usually fixed. These can be reduced over the long term but generally offer no options in the short term.

Then there are things like food, electricity, gas for the car, water and other necessities of life which have to be purchased regularly in order to survive but can often be cut somewhat without undue hardship.

In the case of food one can look for bargains such as purchasing generic rather than name brands, take advantage of weekly specials and use coupons. A person can also usually save by preparing their own food rather than buying the more expensive ready to eat foods.

We rely on our cars for transportation so gasoline is a necessity. However, one can often reduce gasoline costs by eliminating unnecessary trips, planning trips more carefully and doing things like stopping on the way home from work to do shopping rather than making a separate trip.

Check memberships. If you are not using your health club membership or if you are the only member of the family using the membership then cancel the membership or at least the unused family portion. Also, check with your health insurance company and/or your employer as many of these, in an attempt to reduce their health care costs, are providing free or subsidized health club memberships.

Other memberships include things like cable TV, Internet access, video clubs, telephone service, cell phone service, etc. Very often you are paying for duplicate services (cable TV and video clubs) or extra services that you don’t use. Often times you can also save by bundling some of these and paying a lower rate.

There are ways to cut your monthly expenses and, with a little effort, one can usually find and take advantage of this type of saving.