If money is tight and you need to pare back your budget, here are some strategies to start saving right away. Putting even one of these ideas into practice should give your finances some much-needed breathing room, but if you adopt most or all of them, as long as your income remains steady, worrying about your budget will probably become a thing of the past.
Clip discretionary spending. Take a hard look at your budget, suggests Thomas Riddle, a certified personal accountant and financial planner in Bethlehem, Pa. "Can you cut back on cable? Netflix? Dining out?"
It sounds basic, but those expenses add up. A 2011 LivingSocial "Dining Out" survey of 4,000 Americans found that the average household frequents restaurants and fast food outlets 4.8 times a week. If that sounds like a lot, maybe it is. Last year, a Visa survey of 1,005 adults found that on average, American consumers are eating lunch at restaurants almost twice a week, spending about $10 each time. Either way, a moratorium on dining out may save you close to $100 a month -- or perhaps much more, depending on your habits.
Meanwhile, ditching cable could net you an extra $90 monthly -- the average bill for a U.S. household, according to The NPD Group, a market research company.
Negotiate. If you don't want to get rid of cable or your cellphone (another budget crusher) you might be able to talk down your current price, especially if you give your provider's customer representative the notion that you're considering bolting for the competition. Even if you can't leave your electric company for an alternate provider, ask if the utility has a program to help you lower your costs.
Grocery shop smarter. According to the U.S. Department of Agriculture, the average family of four with tweens spent $1,258 at the grocery store in December 2013. An adult male or female spent between $300 and $400. So if you're spending more than that, you could probably do a lot better.
Strategies that are often cited (because they work) include: Don't shop when you're hungry; take a shopping list; look at the unit price as well as the actual price tag; bring coupons; shop at deep-discount grocery stores.
Preplan your week. Much of what we spend is a result of not thinking about what will be coming up throughout the week. We often have no clue what to make for dinner, so we rush out and grab fast food. We forgot about the birthday party or wedding on Saturday and rush out to buy a gift, spending way more than intended. And when it comes to grocery shopping, preplanning meals and clipping coupons should save you money.
Lower your gas expenses. Sites like gasbuddy.com and gaspricewatch.com will find the cheapest gas in your neighborhood. And, of course, you can always combine errands, take public transportation or a bicycle and drive less. According to the California Energy Commission, commuters would save an average of 30 percent on their fuel costs if, instead of driving alone to work, they carpooled, took a bus, rode a bicycle or walked. Considering that the average household spent $2,912 on gasoline in 2012, according to the latest data from the U.S. Energy Information Administration, a 30 percent savings could equate to more than $70 a month.
Reconsider your insurance. You may be in the market for a downgrade. For instance, if your car is getting up there in years and you've paid it off -- and especially if it hasn't retained anything close to its original value -- both comprehensive and collision insurance may be a waste of money.
Collision insurance protects your car if you're in a wreck, liability protects you if you damage another driver's car and comprehensive insurance covers your car if it's damaged by something other than an accident. Usually you buy collision and comprehensive insurance together, but you don't have to. As your car's value goes down, you may want to reexamine your policy.
Someone with a 2008 Toyota Camry who switches to only liability insurance might see their insurance costs reduced by 30 or 40 percent. "Depending on where you live, [that could be] $200 to $600 per year," says Craig Lozofsky, an executive at answerfinancial.com, an insurance comparison platform.
Give up a vice. Sure, we've all heard the cliche about giving up your daily latte, but you may have a different vice. The average consumer spends more than $1,200 a year on beer, according to Survey Analytics. And according to the American Lung Association, the average retail price of a pack of cigarettes in the U.S. is $5.51. So do the math. If you're a pack-a-day smoker, you'll save $167 in one month if you give up this vice, and in a year, you'll save a little over $2,000. Maybe you gamble? There's got to be something, from a serious vice to a relatively innocuous habit (like soft drinks), you can cut back on.
Pay down debt. True, your debt may be the reason you can't save money. But according to the personal finance site nerdwallet.com, the average household has $7,123 in credit card debt.
For instance, say you have $500 in debt, and just to make the numbers easy, you pay 10 percent interest on your credit card. If you don't pay the balance off, you'll accumulate $50 in interest, and the next month, you owe $550. And if you do nothing else, the next month, you'll owe $605. The bottom line: Get rid of your debt, especially the fast-accumulating kind, and you'll have more money left over every month.
Get your finances better organized. This isn't just budgeting -- it's looking at when your bills need to be paid and having a system for keeping your financial life on track.
Gail Cunningham, spokeswoman for the National Foundation for Credit Counseling, points out that we'd probably all save more money, pretty quickly, if we stayed on top of our finances. For example, a late credit card payment means you'll pay a late fee, all because you misplaced the credit card statement.
"You get a late fee, a negative mark on your credit report, your credit score potentially goes down, and you become a greater risk in the lender's eyes," Cunningham says. "And then there's the gym membership that's on automatic pay and you haven't seen the gym in six months. How about habitually picking up fast food on the way home from work because you're too tired to cook? Buying snacks on break out of the vending machine and paying twice as much for the same thing you could have brought from home? All of these could add up to over $100 a month or over $1,000 a year. Now that's real money."