1. Advanced Budget-Cutting Strategies: Introduction
  2. Budget Tips: Plan for What You Really Make
  3. Budgeting Tips for Essential Fixed Spending
  4. Budgeting for Essential Variable Expenses
  5. Budgeting for Nice-to-Have Expenses
  6. A Budget That Changes as You Do

Your expenses shouldn't exceed your income: Simple as that – and not simple at all, as most people know. You may not be able to do this every month, or even every year, but it should be what you do most months and most years. For example, your expenses might exceed your income in December when you buy Christmas gifts, but that’s not a problem if you’ve saved extra from January through November to account for your higher December spending. And you might have high medical bills one year that force you to dip into savings, but that’s okay if you’re adding to your savings in years when you’re healthy.

Remember how we said that budgeting isn’t about deprivation, it’s about putting your money to its highest and best purpose according to your personal values and goals? One of your new budgeting goals might be to reduce your spending in a particular category so you can put that money toward something that is a higher priority for you. In the next three chapters, we’ll give you some specific budgeting tips for each spending category.

Looking for ways to reduce your mortgage payment, rent, cell phone bill, vehicle expenses, student loans or life insurance premiums? Then this section is for you.


Refinance to a lower interest rate. When you refinance, you can extend your loan term if you need a lower monthly payment, but you’ll pay more in interest in the long run. The best option if you can afford it is to shorten your term. Your monthly payment will be higher, but you’ll save on interest in the long run.

How Your Mortgage Loan Term Affects Your Borrowing Costs

Amount borrowed

Fixed Interest Rate

Loan Term

Total Interest



30 years




25 years




20 years




15 years




10 years


If you have more than you need in your emergency fund, consider doing a cash-in refinance to lower your monthly payment and get your loan paid off faster. With any refinance, you’ll pay closing costs, so your savings will need to be significant enough to make up for those costs.

Renting out a spare room or basement to a housemate, or even renting out storage space in your garage or basement, could provide additional income to make your mortgage more affordable or pay it off faster. (See Ways To Be Mortgage-Free Faster, Tips For Renting Out Your Home and When And When Not To Refinance Your Mortgage.)


Each time your lease is up and your rent increases, shop around to see what the market looks like. Could you save money by moving (and come out ahead after the hassle and cleaning costs)? Could you get a nicer unit for the same price? Consider renting out a room in someone’s home instead of renting an entire apartment, condo or house. Roommates can obviously help you reduce your rent payment. In addition, they can reduce your utility and grocery expenses by taking advantage of economies of scale.

Consider ways that changing your rental location could cut other expenses in your life. For example, moving closer to work or moving near public transit could reduce your commuting costs; moving to an energy-efficient unit could reduce your heating and cooling bills. And working as a building manager could allow you to get free or reduced rent. (See 6 Tips For Renting An Apartment.)

Cell Phone

Instead of buying a plan from one of the big four carriers and constantly upgrading to the latest and greatest phone, consider buying a less expensive plan from a smaller carrier and getting an older model of a phone that has proven to be well-liked and reliable, such as an iPhone or Samsung Galaxy. Discount carriers abound! There’s Virgin Mobile, RedPocket, Consumer Cellular, Tracfone, Cricket, Republic Wireless, Total Wireless, Wirefly, Boost Mobile, MetroPCS, Ting, FreedomPop, H2O Wireless, Lyca Mobile, US Mobile, Xfinity Mobile, Twigby, GoSmart and more.

These carriers piggyback on the networks of the big four, meaning you can get similar service for much less. Call quality will be the same, but data speeds and coverage may be slightly lower. Many people find these to be minor inconveniences in exchange for huge savings. As going with an older, less expensive handset, keep in mind that today’s latest technology can be yours for a drastically reduced price in two to three years. 


If you have an auto loan, look into refinancing it at a lower rate and decreasing your loan term to save money on interest. Look beyond the big banks; you may find better rates at credit unions. You could also save on interest by increasing your monthly payment above the required amount to pay off your loan faster. (See 5 Best Companies to Refinance Your Car and How Interest Rates Work on Car Loans.) If you can’t afford your car, you’re not stuck with it. (See Options for When You Can No Longer Afford Your Car.)

Combine errands to save time, gas and wear and tear on your vehicle. Go to the grocery store on the way home from work, or do all your errands for the week on Saturday morning. Walk or ride your bike to do nearby errands or visit friends, if possible. (Also, check out Car Maintenance Tips That Help You Save Money.) Shop around for car insurance annually, and if you don’t drive frequently, consider a pay-as-you-drive insurance company such as MetroMile or ditching your car altogether in favor of using a car-sharing service like ZipCar, if it’s available in your area.

Student Loans

Refinancing your student loans may lower your interest rate, making your monthly payment smaller and reducing your long-term borrowing costs – unless you extend the loan term. Be aware that the only way to refinance federal student loans is with a private lender, which means losing federal student loan protections such as loan discharge upon the borrower’s death (which may be important to you if you are married), income-based repayment, and federal deferment and forbearance that can help you through a layoff. (See Student Loans: Paying Off Your Debt Faster and Student Loan Refinancing: The Pros and Cons.)

Life Insurance

Perhaps the best way to save money on life insurance that not enough people know about – or take advantage of – is using an insurance broker. A life insurance broker who is licensed to sell policies with a dozen or more companies that are highly rated by A.M. Best, meaning that they have the financial stability to pay their customers’ claims, may be able to find you a better rate for your age and health circumstances than you could find on your own. Each life insurer uses slightly different standards for evaluating applicants and deciding what to charge them. A broker might know which companies will offer you the best rates even if you’ve had cancer in the past or used to be a regular smoker. (Read 5 Ways to Lower Life Insurance Premiums and 7 Factors That Affect Your Life Insurance Quote.)

Budgeting for Essential Variable Expenses
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