4 Tips For Making A Budget That Helps You Cut Unnecessary Costs


4 Tips For Making A Budget That Helps You Cut Unnecessary Costs

Budgeting is an effective way to get your finances under control by cutting costs and setting goals and limits. The general concept involves calculating expenses and income and then setting a limit for your spending. You must stay within your limits to remain within your budget.

Here are four tips for creating a budget that will help you identify and cut unnecessary costs.

What Are Considered Unnecessary Costs?

Essentially anything that doesn’t contribute to the household can be considered an unnecessary cost. Your morning coffee, shopping sprees, and even memberships to clubs or other subscriptions can also fall into this category.

The first step to creating a good budget is identifying needs vs wants. This can be a difficult process, because well, who says that morning coffee isn’t more of a need than a want? Obviously, discretion is required here, and we don’t expect you to cut out everything you enjoy.

However, that being said, there are some things that definitely fall into unnecessary expenses that can be trimmed to help you save money.

1. Identify Your Fixed Costs For The Month

Rent, car payments, mortgage payments. These things don’t normally change on a month to month basis.

Once you’ve identified fixed costs, factor them into your expenses. You can start to categorize things by their cost, what category they fall under, etc. This will help you organize your expenditures and know which things cannot be altered.

A fixed expense will have the same effect on your income every month. Once you’ve deducted their cost from your budget, you can figure out what to do with the rest of your money. Fixed costs are often easier to manage since they remain fixed, and this is probably the easiest part of starting a budget.

2. Identify Everything Else

Once you’ve calculated the costs that you can’t change, it’s time to identify everything else. Variable costs will change on a monthly basis. Here, you can list things such as grocery and utility bills, gas charges, and shopping expenses.

Once your variable costs are determined, it’s time to take a look at what’s really bogging you down and cleaning out your wallet; those miscellaneous “unnecessary” expenses. If you want to keep your morning coffee, that’s fine, but you may be able to slash the price by buying store coffee instead of visiting a chain shop every morning.

Any shopping that isn’t necessary for the normal function of your home could be considered unnecessary. Book stores, retail stores, electronics purchases, subscriptions, and memberships can all be considered unnecessary.

3. Use A Budget App To Help Track It All

Attempting to create a budget by hand on pen and paper can be confusing and doesn’t necessarily come out as accurately as you might like. That’s why apps like Mint and Every Dollar exist, to make budgeting simple and quick, even for beginners. You can compare Every Dollar vs. Mint here.

Once you’ve chosen an app, you can link it to your bank and credit card accounts, making tracking transactions and staying within your budget easier than ever. Most budgeting apps will send notifications when you get close to your budget as well, so you’ll always be in the know about your finances.

Once you see first hand where your money is going, you can begin to trim those expenses that aren’t necessary from the budget. Whether this is food, shopping, or something else, a budget app will show you exactly what you’re spending each month on unnecessary items.

4. Set Reasonable Goals

The end result of any budgeting attempt is to save money. In order to do this, you’ll want to start by setting small savings goals for the month, and once you reach them, you can move further towards your ultimate goal.

You can start by only setting a goal of Php 2,000 per month. This could mean two less coffee or fast food trips per month, but you’ll find that these minor costs add up quickly throughout a thirty-day cycle.

After you’ve created the discipline to save, you can move up to higher numbers, and so on. Soon you’re on your way in becoming a millionaire, growing your savings per month and still constantly crunching your budget to meet your needs.

You may have to make sacrifices to meet your goals, but often times, these can have added benefits besides just saving money. For instance, less fast food can mean a healthier lifestyle and less chance of health problems, which is ultimately priceless.

A Good Budget Is The Key To Financial Freedom

Debt-free is the new rich, as the saying goes. Creating an effective budget can boost your savings and help you eliminate those pesky debts you’ve been putting off. You’ll be surprised at how much little expenses can add up, costing you money that could be used for building a future for yourself or eliminating your debts.

Any budget will require discipline to stick with. Budgeting apps help by keeping the budget in your face with notifications. That way, you’re always aware of what your money is being spent on.

As a general rule, any big purchases should only be made after careful consideration. Factor in some extra saving to your budget to account for these purchases so you don’t have to run up any credit cards. Most of all, be patient. Good things will come to those who are patient and careful with their finances.


Tyrone is a passionate financial literacy advocate. He started this blog on November 2008 when he watched The Secret which talked about Law of Attraction because he wanted to become a millionaire and wanted to know how a millionaire acts. At the age of 26, he achieved his first million. To find out more about him, click here or follow him at Instagram

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