It is important to know how to quickly cut your budget especially if you are faced with a sudden job loss or any other financial hardship. It is also great to cut your budget if you are trying to find extra money to pay off debts. Here are 10 steps to help you cut your budget.
Review your existing budget.
It may not be sufficient any longer, but your current budget will still give you a starting point. So get out your existing spending plan and start from there.
Separate wants from needs.
There are certain things, like utilities, mortgage payments, and rent, that must be paid no matter what, so identify them and add them up. Everything that does not qualify as a need goes into the want category.
Identify wants that can wait.
It may be nice to have a top tier cable package or high-end smartphone data plan, but when you are unemployed you may not be able to afford them. Look for places to cut your budget, starting with items you can live without at least temporarily.
Look for big-ticket items you can eliminate.
Cutting the cable bill will certainly help, but think about big-ticket items you can eliminate from your life. If no one is driving the second car, selling it could give you some breathing room until you land your next job.
Consider changing your car insurance policy.
If you want to hang on to that second car, consider dropping its insurance for now. If you can get by driving one car and keeping the other one in the garage, temporarily suspending insurance on the second vehicle could yield significant cost savings.
Review your subscription services.
From movies and TV shows streaming to unread magazines, those extra subscriptions quickly add up. Subscription payments can hide out in many places, from your bank account to your credit cards, so seek them out and get rid of them.
Shop smart at the grocery store.
Grocery shopping can be a real challenge for the unemployed, so think carefully about everything you put in your cart. Switching to generic brands, buying basic staples instead of packaged foods, and avoiding high-priced alcoholic beverages can all cut your budget at the checkout line.
Negotiate lower payments with your creditors.
If you have debt, contact your creditors to negotiate better terms and lower payments. Many creditors are willing to work with their customers, especially when the alternative could be bankruptcy.
Switch to a cash diet for the time being.
Credit and debit cards may be convenient, but they can also encourage overspending. Switch to cash for now, at least until you obtain gainful employment.
Review your progress on an ongoing basis.
The sudden shift to a bare-bones budget can be jarring, especially if you have been earning a good income and are used to buying the products you want. Even so, this change is necessary for now, and it is important to review your progress and keep tabs on how you are doing.