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How to Cut Back on Spending

March 22, 2020 · 6 minute read

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How to Cut Back on Spending

Is there any worse feeling than looking at a bank statement and wondering what the heck you even spent all this money on? One might think, “I swear I haven’t even done anything fun or cool this month.” But somehow, you managed to spend more money than you thought you did. Happens more than many would care to admit.

These days, it is so easy to spend money. Not only are we bombarded by advertisements, but we have to exert almost zero effort to buy anything in the entire world. Buying is as simple as clicking a button.

Saving money is already so difficult, and spending is only getting easier. To combat this, the average person will need to get creative in finding ways to cut spending at home in order to save more.

Because our relationships with money are so personal, there is no one-size-fits-all approach to spending less money. It may take multiple tries on different strategies to find something that works for you.

Below, we will explore a handful of ideas on how to cut back on spending along with some budget cutting ideas. Try one or try them all, and hopefully you’ll find a strategy that works best for you.

Shopping Lists

Think about all of the times that you went to the grocery store without a plan, or hungry, or in a rush. It’s easy to walk away with a hodgepodge of items that cost a ton of money at the checkout counter, but that doesn’t actually do a good job creating a cohesive meal plan for the week.

There are many good reasons to create a shopping list before going to the grocery store. For one, it will save you time. Second, it helps you stick to a plan, which in turn helps you save money.

To make successful shopping lists, start with a meal plan. Choose recipes that you want to eat for the week, and check your fridge and pantry to see if you’ve already got some of the ingredients. This task doesn’t need to take more than fifteen minutes, and is worth the time and money you’ll save at the store.

You can use this same strategy for other types of shopping. Keep a running list of the things you truly need or want to buy, and keep it in mind when you walk into a mall or log onto Amazon. It’s hard to resist the temptation to browse, but having a list of things you actually need will help minimize splurges.

Shop Around

This is one of the more basic budget-cutting ideas, but it bears repeating. If you’re making a purchase—especially a big purchase, like a television, laptop, or car—spend some time researching and looking for deals.

Sometimes, this can be as simple-looking at a competitor’s stores and pricing. With so much shopping moving online, comparing prices is as easy as ever. You don’t even have to get up from the comfort of your own couch.

Don’t just stop as price comparison of the same product; also consider comparable products. Ask yourself—honestly—whether a generic or cheaper version or model would serve you just as well.

Ask yourself if you are being drawn in by brand names or the appearance of having a certain type of product. It almost always works this way:

There are recognizable brand name products, and then there are competitors you’ve never heard of that are creating equally as good of a product at a fraction of the price.

Coupons

Don’t be above good ol’ coupon cutting. Look for coupons from stores on the items you would buy regularly anyway. Check for coupons for just-as-good substitutes. These can be coupons that come in the mail, come with the newspaper, are advertised online, or can be found at the store’s physical location.

Additionally, there are coupon or rebate apps and programs that are worth consideration. For example, Ebates is free and offers cash back on items you were going to purchase anyway.

You simply purchase items at qualifying retailers through the app or via their online portal, and cash magically appears in your account. Especially if you do a lot of online shopping, there’s no reason to not be getting money back.

Wait Period

If you deal with impulse spending, first, know that you’re not alone. Things are also seriously expensive these days, and it can feel like an assault on our better savings habits.

That’s what makes a “mandatory” wait period before any non-necessary purchase such a good idea if you’re at a loss on how to cut back on spending.

It’s very easy to get wrapped up in the idea of a new article of clothing, gadgets, beauty product, video game, and so on without thinking it all the way through. Yes, this shirt may be beautiful, but upon additional contemplation you may realize you have a similar one or that it’s not in the budget right now.

Take at least 24 hours, although 48 hours might be better. You’ll likely be shocked—and relieved—at how many purchases you’re ultimately happy that you didn’t make. Impulse buys can give you a quick chemical “high,” but this quickly wears off and soon enough you’re searching for the next thing.

Look for Big Wins

Every month, you’re spending the largest amount of money on the “big three;” housing, transportation, and food. Improvements to these expenses will make a much larger dent than cutting back on the occasional latte or appetizer.

It’s important for anyone who genuinely wants to know how to cut back on spending to consider the places where they’re spending the most money.

No one wants to downgrade their standard of living. This one is definitely not easy. That said, there’s almost always some way to spend less without feeling like you’re making a gigantic sacrifice. It might take some creative thinking and plotting, but there’s always a way to save money on big ticket items.

Explore what makes sense for you. If you’re never home anyway, consider a roommate. If you don’t ever use the groceries you buy, admit that to yourself. If you could just as easily use public transportation, explore that option. Often, it simply takes getting used to the shift in your usual routine.

Eliminate a Category

Spending freezes are popular, but they’re difficult and not always sustainable. Instead, why not pick one category of spending to eliminate for a month? For example, take a month off from eating at restaurants. Commit to buying your groceries and actually eating them.

Treat this as a game or a challenge. If you make it the whole month, treat yourself to your favorite (affordable) local restaurant that you don’t let yourself go to that often.

Turning your finances into a game (this is a strategy called “gamification”) may be just the motivation you need to spend less and save more.

Save First, Spend Later

One of Warren Buffet’s best lines is also very difficult to adhere to: “Do not save what is left after spending but spend what is left after saving.”

Still, there’s probably not a better strategy for saving more money than making the saving happen automatically, either monthly or after each paycheck.

All banks should have the capability of setting up and automatic transfer of funds from one account (checking) to another (savings account). Set up an automatic transfer a few days after your paycheck is set to hit each month.

That way, the money will leave your account before you have the opportunity to spend it. Couple this strategy with the tracking of your spending, so that you can get used to working with less money each month and don’t run the risk of overdrafting your account.

Track Spending

If you struggle with overspending and just can’t seem to get the hang of a budget, start by simply tracking your spending. Every time you spend, write a quick note in a journal or notebook. Swiping a credit or debit card is so mindless; the act of recording each purchase will make each purchase feel more visceral.

For those that truly prefer to do everything on a computer, you can track spending in a spreadsheet or even in a text document or notes app. Just be sure to stick to it, and to not get distracted by something else (email, social media, more shopping, you know how this goes) when you log online.

Believe the adage that “what gets measured gets improved.” How can you begin to be better about spending if you aren’t taking a critical look at your spending habits? At the end of each week or month, take a look at your spending. Are you on track? Or do you need to rein it back in for a while?

For additional tracking help, determine whether your bank’s app has a budgeting or spend tracking feature. SoFi Money® is a cash management account that provides a weekly summary that puts into perspective all of the week’s activity. Seeing your spending displayed in simple terms may help you manage your money all the better.

Track your spending in the SoFi app now.


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