To effectively reduce the damage done to your cash flow each month look for things you can do that are effective, yet easy to implement.
Some examples:
1. Reduce your transportation costs
The cost to purchase and maintain a vehicle can be quite a lot.
Not only are there immediate costs such as insurance, gas, maintenance, and in some cases, parking fees, but the money you’re spending to purchase the car is money you won’t get back.
When you own and maintain a car it’s costing you in terms of opportunity…you’re spending money to get around that you could have put to use some other way, such as adding to your investment portfolio.
To reduce or eliminate this cost you can:
- ⬥ use public transportation
- ⬥ use a rideshare service like Lyft, Uber or ZipCar
- ⬥ sell a vehicle that you’re rarely using
- ⬥ carpool with co-workers
- ⬥ keep your tires inflated – this helps with wear and tear on your tires as well as your mileage
- ⬥ do your own vehicle repairs whenever possible
2. Eliminate your debt
Eliminate any debts and avoid creating new ones.
Not only will this improve your monthly cash flow, but it can help you at some point in the future if you need to obtain credit for any large expenditures.
3. Refinance your home and maybe your vehicle
If you have a higher interest rate mortgage it might be worth it to refinance your home. When crunching the numbers don’t forget to account for the refinancing costs and pay them in cash if possible to reduce the amount you’re borrowing.
Car loans can be notoriously high for individuals with poor credit, so if you’re paying a high interest rate on your car loan and your credit has improved since you bought your vehicle, see if you can refinance it for a better interest rate and reduce your monthly payments.
4. Student loans
If you’re among the many individuals with student loan debt and the rate is high, it might be worth looking into a consolidation loan for your student loans.
5. Check your entertainment costs
Reducing your monthly entertainment expenditures may not seem like a lot, but it can add up to big savings over time. For example:
- ⬥ Cancel club memberships you’re not using (e.g. that gym you never go to)
- ⬥ Reduce or eliminate your cable bill.
- ⬥ Find inexpensive or free things to do instead such as attending local events, visiting the library or even joining volunteer groups and other organizations.
- ⬥ Cancel magazine and newspaper subscriptions that you don’t use
6. Save on food costs
One of the biggest expenditures in any family is food costs.
Here are some ways to reduce your grocery bill:
Cook at home
- ⬥ Cook in bulk and freeze the leftovers to help for those times when you’re in a rush to put dinner on the table.
- ⬥ Make eating out something for a special occasion…not an everyday event.
- ⬥ Focus on creating simple meals that make use of fresh produce grown locally.
Use coupons and buy in bulk
Buy household items such as toilet paper in bulk. While larger sizes tend to be more expensive, you’re actually paying less per item so the savings can add up over time.
Use the cost per unit to decide which items are truly the best deal…you might be surprised.
Grow your own food
Depending on where you live you can grow your own vegetables and fruits.
Choose vegetables that are easy to grow and that produce a lot, such as tomatoes and zucchini, then freeze and/or can the excess.
Buy generic products
When possible, choose store brand items over name-brand to save. Often, the taste – or quality – of generic items can be very comparable to national brands.
Compare the ingredients listed to see how closely the product matches with the item you usually purchase. If they’re the same or close, try the generic option before automatically assuming it isn’t as good.
Make it a point to try a generic item at least one time…you might be surprised at what you can save with little to no change in your shopping habits.
7. Consider one income…or changing jobs/work hours
Finally, this option isn’t for everyone but in some cases, it might be just what you need to improve your household budget.
If you have younger children, childcare costs can knock a big hole in your monthly budget so reducing or eliminating this expenditure can make a big impact.
And while it might seem as if losing one income will completely destroy the budget that may not always be the case.
This can also mean saving on food costs (few to little pre-packed meals or eating out) fuel costs, clothing, etc. so crunch the numbers to see how this option could benefit your household budget.
