How Can I Reduce My Spending?

Spending cuts, isolatedThe big question this week is, “How can I reduce my spending?”  What this really means is, how can I free up more money so I can save more…or at least spend it on things that I value more?

I like to educate clients that there are only three things you can do with your money:

  1. Spend it
  2. Prepay debt with it
  3. Save it

(Well, I suppose there are more things you could do with money…use it to start a fire, wrap presents with it, make paper airplanes with it…but let’s be serious.)

A key thing to grasp is that no expenses are too small or insignificant.  The daily newspaper, your monthly Netflix or Pandora subscription, the daily stop at Starbucks on the way to work, dining out too often…these little expenses are what adds up quickly.

Expenses generally fall into two categories:

  1. Essential expenses that you cannot avoid, such as your mortgage, rent, utilities, groceries, car insurance, etc.)
  2. Discretionary expenses that you choose to incur, like eating out, entertainment, gifts, furniture, etc.  Discretionary expenses are the ones you have the most control over.

Here are some simple tips to get you started at spending less, so that you can save more:

  • Do you buy a lot of books?  Try the library instead, or do a book swap with friends.
  • Take coffee or lunch to work rather than buying it.
  • Limit eating out to once per week rather than twice.
  • Cut back on smoking or alcoholic beverages.   Heck, quit smoking!
  • Turn lights and TV’s off, and don’t waste water.  Even though utilities are an essential expense, there are ways to reduce them.
  • Email more often, or use Skype which is free, rather than calling long-distance.
  • Always go grocery shopping with a list to avoid impulse items at the end of the aisles.
  • And one of my favorites…if you buy all of your groceries from Zupan’s or New Seasons or Whole Foods, try Trader Joe’s.  You’ll save hundreds, and eat very healthy as well.

Action Plan:  Pick a realistic goal for your monthly spending reduction.  Try not to make too many changes all at once.  To see how big of a difference this can make, do the math.  If you start by committing to reduce your spending by $2 per day, that is $730 per year!  Set the saved money aside for a family vacation or apply this new savings to reduce your debt faster.

We would love to hear how you are reducing your spending!  Comment below and share for everyone.

About Trevor Hammond

Since 1998, Trevor Hammond has helped thousands of families finance their homes and make smart decisions when it comes to their personal finances. Now, as a sought-after mortgage advisor, coach, speaker, and author, Trevor Hammond continues to focus on helping people enjoy more money, less stress, and more life. As the co-author of Borrow Smart, Repay Smart and his 2018 follow up book, Mortgages, Money and Life, Trevor has created unique financial coaching programs and spoken in front of thousands of people on his book concepts ranging from improving cash flow and savings, managing liabilities, to advanced real estate financing strategies for homeowners. His passion for providing financial education and his ability to innovate unique processes that help both clients and originators excel, has led Trevor to become a top producer and build a #1 branch in the country for mortgage lending company Sierra Pacific Mortgage. Whether Trevor is speaking to hundreds of people from the stage, working on his next book or mentoring a Loan Officer one-on-one as a High Trust™ Leader, he is pursuing his greatest passion of all: Coaching.
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