If you are looking to save more money or pay off more debt, you may need to refresh your budget. Take a second look at the expenses which could be ruining your budget.
Your living expenses can slowly grow over the years causing your budget to become unmanageable.
Are your expenses more than your income? Do you feel like you are not saving enough? Do you want to start aggressively paying down your debt?
If so, it’s time to take a closer look at your budget. There may be a few expenses that are preventing you from reaching your financial goals.
Most Expensive Budget Categories
Did you know that some of the biggest expenses (besides taxes, of course) include housing, cars, child care, and food? These categories probably make up a large portion of your budget. They are the first expenses you should investigate because reducing them will have the largest impact on your total expenses.
Expenses that are destroying your budget
Here are seven expenses that could be taking over your budget. I’ve included several questions to ask yourself to determine if there are any ways to lower these expenses.
It is expected that your rent or mortgage is a large portion of your budget. Typically it is 25% to 30% of you take-home pay.
Is your housing expense larger than that? Could you downsize? Could you move to a cheaper location?
What other ways can you save money on housing? If you are considering moving, don’t forget to take into account moving expenses in your calculations.
I never knew how expensive cars were. With car loans, fuel, car insurance, tolls, and parking, it can be scary how much it costs to go from point A to point B.
Is your car loan a big chunk of your transportation costs? Could you ditch that loan by trading your car in for a cheaper one? Could you go to a one car family…or a no-car family?
Are there alternate routes to work that bypass toll roads? Could you carpool to save on fuel and parking?
You don’t have to be a foodie to have an insanely high food bill. Is your grocery budget category high? Your restaurant budget category? Both?
The single most effective way I have found to reduce my food spending is to meal plan. It sounds like a challenge and a time-suck but it’s so easy. Check out my post on Meal Planning 101 and grab my free worksheets to help you.
If you are lazy or lack culinary inspiration (me! me!), then I highly suggest checking out $5 Meal Plan. I originally thought it was crazy to pay someone to tell you what to cook, but let me tell you…it saves you so much time and money! It’ll save you way more money than the measly $5/month it costs.
Each week you will get emailed a meal plan with breakfast, lunch, and dinner recipes as well as a grocery list. Using this link for $5 Meal Plan will get you two weeks free 🙂 You can cancel any time.
As part of your meal plan, you can plan restaurant meals. This will help you avoid the last minute stop to grab pizza.
Children are expensive. One of the largest expenses is daycare.
Depending upon where you live, sending a child to daycare can cost as much as your mortgage. With multiple children, it’s easy to see how the cost of daycare can get out of hand.
So what are some options to reduce the cost and prevent this expense from destroying your budget? First, shop around. Even though this is one area where quality can’t be sacrificed, it doesn’t mean that there aren’t more affordable choices.
If your job is flexible, can you compress your schedule and only work four days out of the week? Saving one day of daycare is a 20% savings. Can you have a grandparent take over childcare for one or two days out of the week?
If you have multiple children, is hiring a nanny cheaper? Can you join forces with your neighbors to see if you can split the cost of a nanny?
5. Your debt
When I graduated college, my debt payments was my largest bill. Yep, you heard that right. My monthly minimum debt bill was larger than my rent!
And when I started aggressively paying off my debt, my monthly payments were several times larger than my rent.
What about your debt? Is it a significant financial burden every month?
If your debt is for something you still own (a car, a boat, etc.) consider selling it so you can eliminate or drastically reduce your debt.
If your debt is on something you can’t sell (student loans, medical debt), start aggressively paying off debt with the Debt Snowball Method (my suggestion) or the Debt Avalanche Method. Your debt doesn’t always have to be a large expense destroying your budget.
And of course, don’t get into more debt.
With mottos like ‘YOLO’ (you only live once) and the emphasis on ‘experience over things’ becoming more and more popular, people are starting to spend more and more money on travel.
This is great (I love travel myself), but it could be a sneaky expense that’s eating up your budget.
Setting a travel budget is critical. If you set a yearly travel budget, you can decide if you want to take several cheaper trips, or one luxurious vacation.
Another sneaky travel expense could be visiting your family during the holidays. Can you arrange a schedule where one year you travel to them, but the following year they travel to you? That could cut some of your travel expenses in half!
Have you looked at how much you’ve spent on alcohol lately? For many, it’s a surprisingly large portion of their budget….sometimes even rivaling their food budget.
Try to determine how much you’ve spend on alcohol these past few months. Remember to include alcohol purchased at the grocery store and at the bar.
Is this what you want to be spending your money on? What else could you have purchased, saved for, or which debt could you have reduced if you weren’t spending money on alcohol?
Take a look at your priorities. Set a strict budget so you don’t spend more than you plan. Create a list of things you can do instead of drinking.
Cutting expenses from your budget
Since everyone’s budget is different, I suggest you look at the biggest expenses on your budget and brainstorm ways to reduce the expense.
It’s not easy to cut things from your budget. Especially if you look at it from the perspective of removing things from your life.
So instead, what do you want your budget to help you with? Do you want it to help you pay off debt or save for something special? Think of the act of fixing your budget as something that helps you get closer to your goals.
Do you even have a budget?
Did I really wait this long to ask this question? Do you even have a budget? Or is your budget long overdue for a refresh?
If you are looking to start a budget, check out this post on How to Create a Budget (That Actually Works).
Also, sign up below to get three free budget worksheets delivered to your inbox over the course of three days.
What expenses are destroying your budget?