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Slash Your Monthly Expenses: Top tips for 5 major budget categories.

in Managing Money & Credit
Budgeting Tips

Amidst escalating prices, mounting housing expenses, and a prevailing sense that our salaries are falling short, a growing number of individuals are seeking avenues to save on their monthly bills. Whether it involves employing house hacking techniques, switching insurance providers, or adopting a more deliberate approach to meal planning, there exists a variety of methods to reduce expenditures within the most significant segments of your monthly budget.

Monthly Bill Management: Habits to Learn

One key aspect in achieving money-saving success is developing smaller habits that, when implemented, can add up to major success Following are a few to incorporate into your budgeting strategy:

Set up automatic payments. Automatic bill payments are not only convenient and (good for the environment), but they can also help you save money. Setup is easy and can typically be done through an online banking program. Consider how many bills you pay each month and then calculate how many late fees you could potentially incur if those bills were missed.

Missing a payment is understandable – sometimes things fall through the cracks. But with automatic payments, you can ensure you’re staying on top of managing your monthly payments.

Ask for savings. Inquiring about promotions, discounts, and even different product rates and terms can help you save money. Whether it’s negotiating the price of your next car or asking for a discount on a floor model couch, don’t be afraid to ask!

Track your expenses. Staying on top of your expenditures should involve recording your transactions to help you save money. Although each mundane purchase may not feel like a lot of money per transaction, you will see that small expenditures can certainly add up.

Stay organized. Have you ever ordered something you knew you already owned but simply couldn’t find it? This can happen with seasonal items and even everyday items such as extra shampoo. When your space is cluttered and disorganized, it can be easy to lose things, making you head to the store more often.

Also, decluttering can also help you uncover things that you don’t really need anymore—if you are willing to part with you the items, you could sell them online or at a consignment store for some extra cash.

Earn money on your everyday spending. Cash-back credit cards are an excellent way to lower your monthly bills. If you can use a credit card responsibly and pay the balance off in full, every month, consider signing up for a credit card that provides you with cashback in everyday categories like gas and groceries.

Increase your financial capability. Increasing your financial knowledge can help you make smarter, more productive decisions, and ultimately help you save money. Consider subscribing to an online financial literacy publication, listening to financial podcasts, or reading finance books to expand your expertise.

Implement a waiting period. A wise financial rule of thumb is to implement a waiting period before purchasing an item. Of course, this shouldn’t apply to necessities and bills, but for “extra” items, you might want to consider trying it.

How to Save in These 5 Major Budget Categories

Cutting out small, daily expenses can certainly help you stay on budget and save significant money. However, focusing on the major expense categories in your budget can help you save at an even faster rate.

  1. Housing
  2. Clothing
  3. Food
  4. Transportation
  5. Debt

Take a look at these five major budget categories as you consider your monthly bill money management.

1. Housing

Your monthly housing payment is likely one of your biggest expenses. To save money in this category, shop around for comparable rentals that offer a lower monthly payment when your lease is up for renewal. Or if you prefer to stay put in your current rental, ask your landlord for a lower monthly payment in exchange for a longer-term lease, or cost sharing with other expenses such as lawn maintenance.

If you’re a homeowner, consider refinancing your mortgage to reduce your monthly payment. Talk to your lender about promotions or discounts they may be able to offer. If feasible, you might also consider renting out a portion of your home (such as your basement) for additional income to offset your housing costs.

Your rent or mortgage isn’t the only part of your monthly housing costs – utilities can also eat up a large portion of your budget.

Try lowering your monthly electric bill by investing in energy-saving appliances, unplugging electronics when they’re not in use, replacing light bulbs with energy-efficient LED bulbs, using natural light, and upgrading your insulation. Setting (and leaving) your thermostat to approximately 78 degrees can also help your electric bill in the warm summer months. Using fans to help circulate air is more budget-friendly than turning down the temperature on the entire HVAC unit.

Ask your gas and electric companies about budget billing options. Budget billing programs offer many different options such as fixed-rate plans where you pay the same amount each month, regardless of how much electricity or gas you consume. There are also budget billing programs that offer a lower energy rate for different times of the day and year. Call your provider and see what options are available.

You can also save on your water bill by taking shorter showers, waiting to run the dishwasher and washing machine until they are full, installing low-flow shower heads, fixing leaks quickly, and utilizing rainwater for your yard and garden.

Insurance can also be a major line item in your budget. Call your insurance provider and ask if they have any discounts for bundling services (such as home and auto insurance).

2. Clothing

Clothing can be another budget category that ends up taking a large portion of your income. Clothing is a necessity, but oftentimes, it can be an emotional purchase—something we buy to feel good, look better, or be perceived a certain way.

The first step in lowering your monthly clothing bill is establishing needs versus wants. For clothing that you know you and your family will need, try shopping off-season to find the best sales and clearance items.

Consignment and thrift stores can offer a treasure trove of high-quality clothing items at rock bottom prices and as a bonus, you can bring in clothes you no longer need and potentially earn some money back! These types of stores can be especially useful for families with young (growing) children.

For one-time wear items, consider borrowing from a similar-sized friend or even renting from a store. Many online stores will rent quality clothing items for special occasions. This helps you save money and space in your closet!

3. Food

Even before inflation, groceries and dining out can quickly eat away at a monthly budget. However, there are many small steps you can take to lower this category.

Planning your meals ahead of time, whether it’s one or two weeks, can help you create a shopping list of food you will actually need and eat (thereby reducing waste). You’ll also have a sense of purpose when you go to the grocery store and take less time. Be sure to always shop on a full stomach so your hunger doesn’t influence your purchases!

Having quick, convenient food on hand (such as a frozen pizza) can also help save you from ordering take-out or picking up food after a long, busy day. Sometimes you can’t always get to the meal you had planned, so having a quick, affordable meal on hand is helpful.

Buying items in bulk can also help you save money. Be sure to break down the price per unit to ensure it’s a good deal first. Bulk purchasing can especially help big families save both time and money each month.

You can also double up on your meals to have enough leftovers for lunches, or freeze them for future meals. This will also save you time in the kitchen and energy usage from your oven or stove.

4. Transportation

If you’re in the market for a new car, consider buying a reliable, used car with a clean mechanical history. Finding the balance between a used vehicle and one that won’t cost you an arm and a leg in maintenance can be somewhat tricky, but utilizing online resources (such as Carfax) can offer you valuable information on a vehicle before you commit.

Ensuring your car(s) gets regular, routine maintenance can also help save you money in the long run. Bundling your errands and carpooling can help you lower your monthly gas bill.

If your family has multiple cars, consider the cost of maintaining them—maintenance, car insurance, registration, gas, etc.—and see if they are all truly necessary. Sometimes the occasional cost of an Uber or rental car is far less than having multiple cars in a household.

5. Debt

If you carry credit card debt, consider consolidating your debt to lower your monthly payment. You can do this through credit card refinancing, taking out a personal loan, opening a home equity line of credit (HELOC), or even signing up for a debt management plan.

You can also try negotiating your debt, especially with items like medical bills. Call and ask if there is a discount for paying in cash, if there is financial assistance you can apply for, or if they can extend the repayment period. You can even call your credit card company and inquire about adjusting fees and rates.

Importantly, while you’re working to lower your overall debt, be sure to avoid taking on any new debt.

Budget Wisely With Lafayette Federal

Now that you are equipped with a variety of ways to save money each month on expenses, it’s time to put that extra cash to work!

Certificates provide a low-risk way to save money over a period of time. At Lafayette Federal, we offer nation-leading rates as high as 5.15% APY (Annual Percentage Yield) and terms up to five years on fixed-rate, jumbo-rate, and variable-rate certificate options.

You can also earn competitive dividends through our various savings accounts, where you can start earning with as little as $50. Your deposits are safe and insured up to $250,000 and you also have the option to invest your money through our IRA and Coverdell Education accounts.

Not a Lafayette Federal member yet? You can become a member by completing an online membership application.

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