If you don't have enough cash to handle your bills, your regular spending, and all the important things you want to do in your life, there's no reason to get down and discouraged. You can do something to change the situation and it might be easier than you think.
How to Find More Money In Your Budget
Creating financial breathing room doesn't necessarily require a major lifestyle overhaul. Try these tips to change your spending so you can find more money in your budget to focus on what’s most important to you.
1. Make a Change to Your Fixed Expenses
If you want to make a big impact on your budget, face your fixed expenses head-on. These are things like rent or a mortgage payment, your car loan, your bills — everything that you have to pay each month. There might not be any way to stop paying for these things. We all have cost of living expenses. But you could start paying less for yours.
Consider a move to a less expensive housing situation. Bring in a roommate. Turn an empty room or a finished basement into an Airbnb and use that income to pay your mortgage. Trade in your car for a less expensive one. Call your service providers and negotiate lower rates — or simply ask what your options are for paying less each month. (For more, see: 4 Ways to Cut Your Living Expenses.)
2. Reconsider Your Insurance Needs
Review your insurance coverage, including homeowner's or renter's insurance, car insurance and health insurance. Are you carrying more coverage than you need? Would raising your deductible help secure lower monthly premiums?
Call your insurance providers and ask them to walk you through the options for reducing your current rates. Inquire about discounts and consider different plans or policies that could cost you less each month (without leaving you underinsured).
3. Adjust Your Tax Withholding
This is a good option to consider if you usually receive a tax refund each year. That means too much of your paycheck goes to the government during each pay cycle. Instead of sending that money to the IRS, only to have them give it back to you once a year, adjust your withholding at work. You won’t get a refund, but you will keep more of your own money in your pocket throughout the year.
4. Eliminate Wasteful Spending
Wasteful spending comes in many forms — but no matter how it might show up for you, one thing is for sure: it costs you money. Whether its energy inefficiencies, food waste, or impulse buys you later regret, one easy way to make room for more money in your budget is to eliminate wasteful items from your life. (See also: 5 Ways to Control Emotional Spending.)
This could be lurking anywhere, so to find it, consider going through this process:
- Print off your bank statements and credit card statements from the last three months.
- Get a highlighter and go through each purchase or charge, line by line. Highlight anything that, sitting there today thinking about the money spent on that thing, makes you feel a little regretful.
- You can also highlight anything that might indicate waste, or just didn’t provide you with enough value to justify spending money on it.
Now you know what you can cut back on — or cut entirely — in your budget to free up cash for more important things.
5. Use Tax-Deferred Investment Vehicles
Contributing money to accounts like 401(k)s, traditional IRAs, and 529 plans may help you save on your tax bills. This is a great way to get a two-for-one deal with your money: you may pay less to the IRS while increasing your savings and the value of your nest egg.
A Health Savings Account (HSA) is another tax-deferred savings option. You must be enrolled in a high deductible health plan to open an HSA, but these accounts offer the benefit of tax-deductible contributions, tax-deferred growth and tax-free withdrawals for qualified health care expenses.
6. Cut Your Subscription Services
Subscription services and subscription boxes are growing in popularity — but often we sign up for things that in the end we find ourselves not even using anymore, or at least to the degree we once were. Examine any automated monthly subscription services you are currently paying and if you’re not getting the same value out of it today as when you signed up, consider cutting it.
Have you looked at your cable bill lately? Do you still need all those channels or services? Maybe it’s time to consider cutting the cord, or at a minimum inquiring whether your carrier will lower your rates if you are considering cancelling or eliminating some services.
7. Make Some Easy Shopping Swaps
Finding more money in your budget isn’t about cutting all your spending. It’s more about trimming the excess fat from your cash flow. A great way to do that is with the shopping you already do.
Instead of buying name brands, choose generic. Make a list before you go to the store of what you need, and only buy those things. Sign up for email lists with your favorite stores to get coupons delivered straight to you.
You can also try making some simple changes to what you consume to save a little more. You don’t have to become vegetarian, but practicing “meatless Mondays” or having a few days a week where you opt for vegetables instead of meat can save you a ton in the grocery store. There are many variations of these little tricks, and these small, simple swaps won't leave you feeling deprived, and can add up to a lot of extra money left in your budget.
8. Refinance If It Makes Sense
Whether you have a mortgage, student loan, or another kind of debt, consolidating or refinancing could help you save money and lower your monthly payments on those balances. This isn’t necessarily true across the board, however. It depends on the interest rate of your existing debt and the rates you could qualify for through a refinance.
It also depends on things like your new loan terms and the cost of underwriting a new loan. Don’t just refinance or consolidate debt without running the numbers to see what’s better: keeping your existing balances or refinancing. (See: 6 Questions to Ask Before You Refinance.)
9. Keep Fees in Check
Paying fees tends to be a complete waste of money — and in many cases, they’re easy to avoid. Set reminders on due dates for bills and credit cards, or switch to auto bill pay so you never rack up late fees. Evaluate services and things like the accounts you use to see if there are lower or no-fee alternatives and make the switch.
You can even evaluate things like your 401(k) plan or other investments and see if you’re paying too much in fees there. Switching to lower-fee investments can add a lot to your net worth over time.
Get a Second Set of Eyes on Your Habits
One of the best things you can do for your financial life is to get a new perspective on it. We all have blind spots and things that we don’t even know we should be looking for. It’s one thing to cut costs where you know you can. It’s another to fail to make room for more money in your budget simply because you don't know where to look. This is where a professional can help make a huge difference.
Research shows that working with an advisor can add significant value and can potentially help you grow more wealth in the long-term. When choosing an advisor, pay attention to the fees they charge and the services they provide. Consider also their preferred way to communicate and overall availability. When reducing spending and saving more money are priorities, it's important to find an advisor that delivers the services you need at a rate that's affordable and reasonable for your budget. (For more from this author, read: 5 Signs You Are Sabotaging Your Savings.)