How to Cut Expenses Without Losing Out

If you’re someone who enjoys budgeting, keeping track of your spending down to the last bottled water of the day, consider yourself the exception, rather than the norm.

Most individuals and couples alike, whether they’re budgeting household expenses for themselves or the entire family, rarely exude happiness, jubilation or enjoyment out of managing money.

The general public views budgeting as a means to save for the future but more so as something they have to do, rather than want to do. And while that doesn’t necessarily make budgeting awful at a glance, the real hurdle from a budgeting standpoint is the idea that you have to pick and choose what to go without, and make difficult decisions often times to cut what you enjoy but simply can’t afford.

Buying is fun. Saving money isn’t.

If you need any more proof than those two simple declarative statements, consider that 82 percent of people have a budget, but 20 percent of those budget “in their head,” suggesting that no real rhyme or reason plays into their would-be savings plan.^[1]

This haphazard approach to saving money is an indicator of why we’re so bad at it.

Studies have varied, numbers much the same, as far as how much the average person has saved. The low side of that is around $1,000, a meager number when you consider household repairs, car repairs and medical bills that could potentially abound.

The truth is if you’re under 35, the median average is a meek $1,580 in your savings account. That number grows as you get older, but hardly blows away the eye test with $11,000 being the highest average, but for those who are 75 years or older.^[2]

When you consider that it might take a cool million to retire, $11,000 just isn’t going to cut it.

And that brings us back to the budgeting piece, and why so many dislike or despise this task.

Simply put, it’s easier to spend, track in a way that is hardly logical or with attention to detail, and worry about the fallout after you’ve tried on your new outfit, upgraded to the newest smart phone or bought concert tickets for two for about as much as your mortgage.

But as much as budgeting and saving money (versus the enjoyable alternative of spending) is vilified at every twist and turn, you could also make a strong argument that those who budget still spend but do so in a way that looks past a complete “cut” and instead amends what they’re spending on as more alternative than outright elimination.

Budgeting might not ever be your most favorite thing to do, but those with an acumen for it find ways to get creative, save money and not skip that proverbial beat when it comes to getting what they want. They find ways to make it work, even if it means taking the lesser of a product or service, yet still enjoying it on some level that allows for compromise and contentment instead of the overwhelming feeling that you’re missing out.

Saving money through cutting expenses is always an option, but it doesn’t have to be your only one.

Consider Downgrades a Good Thing

The word “downgrade” itself is on that is riddled with negativity.

Just the word “down” itself is bad, and doesn’t sound like anything you want to be part of any time soon.

But downgrading as it relates to saving money makes all the sense in the world.

The difference between a downgrade and cutting as far as expenses go is a major one. Getting rid of things altogether means you no longer can enjoy them, versus keeping some form or facet of the product or service, minus the cost prohibitive piece that is concerning.

Your budget is meant to be bent, not broken, so consider things like cable television, cell phone service, shopping for clothes and take out as ways you can still enjoy what you want, but making it a point to shop around and get the very best price.

Take cell phone and the service, for example.

The average person spends $47 on a cell phone monthly bill, but 46 percent of the population spends more than $100, while 13 percent is double that.^[3]

That average of $47 is where you’d ultimately want to be, so who says, with so many options, carriers and perks (not to mention companies begging for business) you can’t have data, social media, sports scores and, of course, talking at your fingertips, minus the ballooned cost.

Clothing also can be something you overspend on, but experts agree you should be right around five percent of your salary as far as the dollars you should put toward clothing each year.^[4]

Spending more than five percent can get you into quite the financial bind, so with that, why not consider the time of year you shop. Purchasing clothing in the offseason can save you anywhere from 50 percent off or more. Consider buying outerwear in March, or summer styles being ripe for the picking in September.

As for other downgrades, the world of streaming services has taken cable and satellite providers by storm, so if you’re struggling financially with a $100 or more bill for the TV and movies you want, consider streaming as a better source for entertainment on the right financial terms.

Dropping down to standard TV channels and including Netflix, Amazon and Hulu as streaming services cuts your bill almost in half versus a 200-plus channel lineup through cable.^[5]

Two-hundred channels and nothing on; how about 200 channels, and you only find yourself watching five of them. Doesn’t lowering your cost make even more sense now?

Learn How to Budget Broad and Specifically

What could you possibly do with $70,000? That’s more than a down payment on a home, a superb car (and then some), not to mention very much a head start on education for the kids.

That figure is what the average person spends on take-out food in their lifetime.^[6]

Consideration for something like that comes from those who understand that fine dining and take-out food isn’t completely off limits, but instead is a budgetary item you’d consider specific, one that can be overlooked if you’re not paying attention.

Who wants to realize after a lifetime that they squandered away that kind of money on Chinese food and pizza?

When you learn how to budget and look for ways to cut expenses, the general population immediately wants quick fixes on larger, broader dollars going out the door. And while those can be adjusted, often times you don’t realize how much you’re spending by not specifically budgeting on the little things.

Would you think that the average person spends more per year on coffee than investing for retirement? That alarming statistic is true, when you consider the average person spends $1,000 per year on coffee.^[7]

This isn’t to suggest you can’t enjoy take-out food or bottled water, coffee or whatever other smaller expenses you’re indulging in but rather a call to action to start tracking it better. When you talk about “cutting” expenses and not missing a step, you can still have bottled water or coffee and other small expenses but on your terms. Rather than spend $3 for a coffee, pack it from home. Same goes for lunch, along with meal planning to avoid spending thousands in your lifetime on take-out food.

The larger-scale expenses also need to be reviewed, and if you’re not constantly shopping around for a better, less expensive vehicle, insurance or other negotiable expenses, you’re missing out on being able to save money.

The average new car loan payment is $483, roughly $5,796.^[8]

When you consider that amount, ask yourself: Do you really need a brand new car? Could you get by with a used one for half the cost?

The average car deprecates at a very high rate; a new car depreciates 19 percent in its first year.^[9]

When you consider that fact, you can easily save money on a car that isn’t brand new.

The same goes for housing. The best practice is to spend 30 percent of your gross income on housing.^[10]

Anything more might lead you toward struggling to make payments or pay other expenses that are fixed.

Get Creative with What You Want

Discussing what you want versus what you need is always met with interpretation, even though a want and a need are completely different. Needs are food, shelter, utilities and things of that ilk, but that doesn’t mean you can’t paint your budgeting and expenses brush with a little creativity behind it.

Price negotiation is a way to also keep your expenses intact, but do so in a way that allows you to continue to have the wants and the needs, but with better rates, ticket prices, etc.

Negotiating “needs” could be something as simple as calling your insurance company and telling them you’re shopping around, and the same goes for a better purchase price on a vehicle, energy provider, home warranty or anything else that you’d like to keep but is always up for review, similar to the ones you might have at work.

Why wouldn’t expenses and what your spending your hard-earned money on be in that same category?

As for “wants,” this also is an area for negotiating at its finest.

You need to understand, particularly when you are in a competitive marketplace where other retailers and businesses want your business, too, that walking away from a price you don’t want creates need on the part of the company.

In addition, negotiating well also starts with knowing the price of the product or service you want, so that you’re not immediately being taken advantage of when you buy.

And any time you negotiate price and get creative with what you buy, don’t be afraid to be unreasonable with your demands and ask for extra perks.

Retailers are notorious for price markups, with clothing and furniture and being the one that stands out the most. The average markup for clothing can range from 100 to 350 percent, while furniture is anywhere from 200 to 400 percent.^[11]

That’s mostly why you see advertisements for such huge discounts on both of those items. When dealing with a furniture store, tell them you want a free piece of furniture for your business, free delivery and anything else that comes to mind.

Often times negotiation of a better price on an expense is a fearful experience most opt out of without fail.

Using jobs and asking for a raise or better salary, about 18 percent never ask for or negotiate a better salary, while 44 percent say they negotiate once and a while.^[12]

The fear of losing your job is high, but that fear of confrontation stems into not only salary and job-related demands but also how you interact when you’re asking for better deals on this, that and the other.

You owe it to yourself to ask, if nothing else.

Painting budgeting as an annoyance is the easy road to take.

Consider it more like “piling on” and bashing budgeting because no one is supposed to love doing it.

But when you think about budgeting as a way to not only save but plan for the future and not have to worry the next time your car stalls, the roof leaks or the kids need braces simultaneously.

The notion that budgeting has to be an all or nothing endeavor is comical if you consider other avenues that are perfectly acceptable in order to save and still revel in what you want, albeit at the right price.

Laziness often is the key contributor to why people can’t save. They don't budget or do so in a way that doesn’t make a whole lot of sense.

The other piece, beyond laziness, is depriving themselves of what they want, only to go overboard with a single shopping trip or spa package, that puts them right behind the financial eight ball they were hoping to avoid altogether.

That’s why deprivation isn’t the answer. It leads to unhappiness and eventual splurging of funds.

Instead, try working around what you have now by keeping the generalities of your expenses in tact but looking for ways to get the best price, change providers of vendors and take advantage of what’s free, among other things.

Doing so is going to make budgeting tolerable, and more importantly, rewarding.

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