The concept of saving money by cutting expenses may not be top of mind for you. When I was a young soldier serving in the United States Army, I thought the only way to save money was by earning more money. However, earning more money is not the answer to helping you save more money. After 12 years of service all I had to show for it financially was over $32,000 of credit card debt – even when my food and clothes were paid for and I was provided a place to live! I ended up with NO SAVINGS and a ton of debt because with every promotion my pay would increase but my spending would increase even more. If I have said this once I’ve said it a million times: what separates those who have savings from those who don’t comes down to the simple formula of spending less money than you make. 

I believe a large contributor to people being unsuccessful when it comes to spending less is that they take an all or nothing approach. When they do this, they make such drastic cuts in their spending that after only a short time they become frustrated and give up. I am not saying that making drastic cuts in one or two areas of your spending doesn’t work, but finding many places where you can cut out a little can help keep you on track for a longer time.

For example, if you cut out your daily latte, you could save over $150 a month. The same goes for the mid-day energy drink pick-me-up; that afternoon ritual will cost you over $100 a month. If you take an all or nothing approach, you will likely end up with a caffeine withdrawal headache and after a short period of self-denial, you may find yourself back to spending hundreds of dollars each month on those drinks. Instead of purchasing both drinks every day you, what if you decided to alternate one per day? You can save roughly $125 a month and still get to enjoy both of those drinks. In addition to simple changes to your spending habits like this one, below are my two best tips to help you cut your overall expenses:

#1.  Track your expenses.

Grab a notebook and commit to tracking your expenses for the next 30 days. Doing this is as easy as writing down what, where, when and how much you spend every time you spend money. On average, you can expect to save anywhere from $150 to $250 after performing this exercise. So how does that work? Sunlight can make a great disinfectant, and it is only after you know what you are spending your money on that you can choose where to reduce or cut. 

#2.  If you don’t see it, you can’t spend it.

Before you pay anyone else, make sure you are paying yourself first. To do so, put money into savings, preferably at a financial institution other than where you have your checking account so it is harder to quickly transfer money from your savings directly to your checking account. Direct deposit and auto-draft are two terrific options to do this each month without any effort on your end. By getting that money out of your checking account, you will have no choice but to spend less because the money won’t be available to spend. 

If you need help navigating your finances and determining what expenses make the most sense to cut, consider working with CERTIFIED FINANICAL PLANNER™ professional today.