The New York Budget is all about spending less while still living well. I don’t cut out the things that truly make me happy and I spend money – I just spend on my priorities. When I talk to friends who are trying to spend less, whether they are trying to get out of debt, create a fund for investing, or accomplish some other goal, they are always looking at their entertainment fund. The most common strategies I hear from those trying to save money include:
- I need to go out to bars less
- I need to eat out less
- I can’t afford to travel this year
Those are just a few examples, but you get the idea. Cut discretionary spending. Now, of course, that is a GREAT strategy. Readers of this blog will know that I think the benefits (both monetary and health) of cooking your own meals is tremendous. Making choices and substituting expensive entertainment for equally enjoyable free or cheap entertainment is a great call.
However, these same people rarely look at their necessities as opportunities for spending less. Sure, we all need food, water, clothing, and shelter. These days, you can throw in utilities, Internet, cell phone and possibly more, depending on your situation. There are always substitutions you can make, even with necessities. Here are the extremely simple steps you should take to take advantage of opportunities to spend less on necessities:
- Examine: Take a look at 1 month of spending (even better 2-3 months!) – This is SO easy with sites like Mint.com and PersonalCapital.com these days.
- Recognize: Pick out your recurring or “necessary” spending and examine each item you spend on separately.
- Categorize: Decide if the item is truly “necessary”. Here are some questions you can use to help decide: Were people spending money on this 10 years ago? 50 years ago? What would happen to me if I didn’t have this? Do I know anyone who doesn’t have this? How are they getting by?
- Decide: If it isn’t truly necessary, that doesn’t mean you have to get rid of it. Just know that this has become discretionary spending, so you are making the choice to keep it or forgo it. But, for instance, while cable TV seemed like a necessity until recently, now, more people than ever are cutting the cord.
- Explore: Figure out ways to reduce the cost. It could be as simple as replacing your light bulbs with LED bulbs. Try to strategize ways to reduce the cost while still getting the same service.
- Substitute: You’ve decided that you absolutely need a product or service. Now it’s time to decide whether or not you need that brand of product or service. Do you really need Verizon Wireless? Or can you substitute Republic Wireless instead? How can you game your clothes spending? Can you find cheaper groceries?
Personally, I like to focus on the big stuff first (which is why I am planning on moving to another NYC apartment in October to reduce my rent). But if you are feeling squeezed and are tired of making sacrifices in your social life, it might be worth taking another look at your “basic needs”.
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