• Cutting Costs in 2016

  • by Nate Nordstrom

Many people in the United States associate cutting costs or budgeting as a painful way to not spend money. Roughly 80% of Americans have some sort of debt, and it would be fair to say less than half of that 80% have strong budgeting skills and above average financial prowess. So how can we eliminate debt and increase our savings? By cutting costs. Cutting costs is something everyone should do and monitor at least once a year to lead a financially responsible life.

So where do we start?

The best place to start when cutting costs is monitoring your financial situation. Do you use your credit card that already has a substantial balance to pay for a $4 cup of coffee when you can make a cup of coffee at home for about 16 cents? A financially savvy person wouldn’t because they can make a self-conscious decision to save money day after day. Monitoring and keeping an open eye can substantially help anyone looking to save money and cut costs.

What to cut and what to keep

Deciding what to cut and what to keep is about personal preference and sacrifice for each person. Some people enjoy leasing new cars and don’t mind paying the monthly payment to borrow the car because they like having a new car every few years. That’s fine, but they need to know that their option may not be the most effective for budgeting.

Value is the basis of what people buy. When you buy that Starbuck’s coffee, you buy it because it tastes better than coffee you make yourself and you have the convenience of someone else making it. When you’re trying to find things to cut spending on, you want to start in areas that have no value for you. An example would be the gym membership that hasn’t been used in over a year, but takes $30 out of your account every month. What about those 900 cable channels you have that you do not watch? Figure out what you do not need and cut the cost to save the money. You’ll be better off.

Test Yourself

Two of the best pieces of advice I ever received are; always pay with cash, never with plastic, and see how many days you can go without spending. Many people in today’s society think that both of those things are fully impossible. Turns out they aren’t. When I started doing both of those things, I found that I saved at least an extra $100 a month. My record for days without spending money was six – and then I had to buy a tank of gas. But that was six days I could easily have bought lunch or coffee, but I didn’t. At the end of the week, I saved about $75, which I found to be rewarding and very exciting. These are a few techniques everyone can use when they’re first trying to save some money or budget more appropriately.

Everybody Is Different

When you talk about personal finances, people react differently. Most people don’t share the same views when it comes to finances. Some people are very safe and cautious about their money. Others are very liberal with their money and like to spend it. At the end of the day, everyone is entitled to their opinion. How you feel about your finances and financial goals is how you’ll go about your budgeting. Maybe you start to budget every single expense; maybe you start to spend more because you think you’re budgeting too much already. It is all about individual preference, and everyone has different goals. However, everyone should be aware of budgeting and protecting their income in 2016.