As glamorous as extreme couponing may be to some… it’s likely not the picture you had for your financial situation. Being a multi-millionaire, owning some property and a few lucrative investments… sounds a little more like it, right? While I can’t promise that you’ll be the next Warren Buffet after reading this article, I can make sure that you’re at least able to get your expenses under control.

Developing healthy money management skills is essential to achieving financial stability and financial freedom.

We have the ability to increase our income by getting a promotion at work, looking for a higher paying job, or taking on a side hustle. All of those things are possible but it could take a little time for us to see an improvement in our bank account. But the one area that we can start to have an impact on immediately is our expenses. If you’re able to reduce your expenses, it equals instant extra money in your bank account. So I’ve got a few tips for you.

Here are the top 4 areas that can help you lower your expenses and get a hand on your finances.

make a plan to eliminate debt

Repeat after me: Debt is not my friend!

You may be wondering how spending money to pay off debt is going to help cut your expenses. Let me explain. Most of us have debt that we pay towards every month. When things are tough we pay the minimum, right? Only to find the next month that new interest charges set us right back (or close to) square one. Take the time to add up how much you’re currently paying towards debt repayment. If you have 5 credit cards and you pay $40 towards each every month that’s a whopping $200 (and you’re likely not really paying down the interest).

What could you do with an extra $200 each month?

The problem with debt is that it’s convenient. You pay it down and then boom, next month there’s an emergency and guess what gets charged right back up? You guessed it – your credit card.

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To really get serious about paying down your debt you’re going to have to get your mind right.

If you keep seeing debt as a ‘fixed’ line item in your budget, you’ll never create the urgency needed to put together a plan to pay it off. When you see debt as your nemesis, something that is siphoning extra money right from your wallet each month, that’s when you’ll be mentally ready to tackle it.

Don’t think you have the extra funds to pay towards debt repayment? Read on, for areas where you can cut back and create the extra cash flow you need.

take control of your housing expenses

For most of us, housing is our biggest monthly expense. Whether we’re renting or buying our current home, our cozy little abode costs us a large portion of our income each month. Yet, it’s often the one area that we don’t consider when looking to free up additional funds.

What if you found an apartment that was $200 less per month? As long as you managed your moving expenses properly and got back your current deposit in full, you’d increase your monthly income by $200.

But, what if I’m a homeowner and I can’t just up and move?

If you’re buying your home, consider refinancing the mortgage loan while interest rates are still very low. Refinancing could save you hundreds of dollars per month. Do your research. Find a bank that offers few or no closing costs on refinanced loans and can offer you the best rate possible.

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Not sure how much you could save on your mortgage payment?

This site has an easy to use mortgage calculator: CalcuNation – google the current mortgage refinance interest rate, plug that % into the calculator along with what you currently owe and see if you’d be better off refinancing your home.

Tip: Refinancing can also help you eliminate private mortgage insurance. If the value of your home has appreciated and you’re refinancing 80% or less than its current market value, you might just see that PMI line item disappears from your new monthly payment. Which means… more money back in your pocket!

eliminate unnecessary spending

We work hard for the money we earn. It’s normal to want to enjoy it and spend it how you please, but in order to achieve true financial freedom, you may need to make a few temporary sacrifices. Think about it this way, the more you cut back now, the more you save or have to pay down debt. Once you’ve paid off your debt and eliminated unnecessary spending, you’ll have a lot more money to play with!

Reducing your cable service, canceling your current gym membership and getting one for $10 (Planet Fitness), or even bringing your lunch to work, are all sacrifices that you can make to keep more of your hard-earned money.

Here are a few other examples of eliminating unnecessary spending:

  • Consider bundling services (like cable, phone, and internet or home and car insurance).
  • Cancel monthly subscription boxes and start meeting your girlfriends for lunch instead of dinner (dinner prices at restaurants can be more than double the lunch prices).
  • Call your credit card companies and ask for an interest rate reduction (if you have a good payment history, they’ll likely give it to you).
  • Keep in mind that these don’t have to be permanent changes.
  • As you pay off your debt, you’ll free up cash to spend however you please.

create a substantial savings

Being prepared for unexpected emergencies is the easiest way to keep money in your pocket. For example, you don’t have to worry about canceling plans or charging up your credit card if you have savings set aside to cover expenses that would otherwise wreak havoc on your bank account. 

If you put a substantial amount away each month, on the front end, you’ll always be prepared for a rainy day.

Start with a set amount, most recommend having a minimum of $1,000. Make that your emergency fund. Then, set a specific amount that you would like to have stashed away…. like comfort money. It’s the money that gives you peace of mind – like just in case you want to quit your job or need to move unexpectedly.

Once you’ve achieved a comfortable nest egg, you can put the money you had been allocating to savings back into your regular cash flow… Or, continue to save for specific purchases (like for a vacation, new furniture, down payment on a house).