Two Ways To Attack Spending

Cutting back on spending can be overwhelming…where do you start?  And how do you keep going?  And what happens when you mess up?

I’m going to propose two ways to start your journey to reducing your spending:  the 10% method, and the one month method.  Neither are a comprehensive system but rather a jump-start for when you are stuck.  And both are easy!

The ten percent solution asks that you try to cut back your spending by 10% in each spending area.  10% less on telephone, 10% less on eating out, 10% less on utilities.  For some categories, this is a piece of cake:  just bringing your lunch to work one day a week will reduce your lunch expenses around 10% as you’ll save 20% of your eating out expenses but incur a few new expenses for lunch items.  Other categories can be harder, like automobile fuel.  If you are already a pretty conservative driver, there might not be much you can do to lower your gas bill much.  You can combine errands, and maybe carpool a bit, or just walk a place or two if possible.  Once you’ve successfully dropped most of your spending by 10%, see if you can cut it another 10%.  Eventually, you’ll find the place where you can’t or don’t want to cut any more.  Once you’ve found that spot, I can almost guarantee that you will have dropped your spending by 20% or more.  If you truly can’t find anywhere to cut, then good for you – you are already a careful spender.

The one month solution feels more drastic, but it is for a shorter period of time.  For just one month, see how low you can cut all your spending.  Don’t buy any groceries that you don’t need to survive.  No new clothes.  No movies.  No eating out.  Nothing that is not essential.  It might be unpleasant, or it might be a fun challenge, but either way you will hopefully go back to spending with a new attitude.  Now, if you are just going to go hog-wild on day one of the new month, this is not the solution for you.

I like the one month solution because it is a short-pain, big gain way to get started on reducing spending.  The modified version is to cut back in one or two big categories for a few months.  Just yesterday, I advised a client to do some serious spending reduction for a few months to pay off a credit card bill.  I’m not sure she is going to listen, but I do know that she has the means to pay off that bill in a few short months if she really curbs the amount of money she spends on non-essentials.

On the other hand, I like the 10% solution because it feels more doable.  I’m pretty sure I could cut my food bill by 10%, and I could certainly cut my beer bill by 10%.  If you call your cable company and reduce monthly bill by 10%, that is savings for more than one month!

Every little bit adds up, so consider one of these plans if you are looking for a simple way to cut your spending.

About the Author

Kate Horrell
Kate Horrell is a military financial coach, mom of four teens, and Navy spouse. She has a background in taxes and mortgage banking, and a trove of experience helping other military families with their money. Follow her on twitter @realKateHorrell.