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Upgrade Your Budget by Downsizing

Written by Jeff Rose on October 31, 2013 in Retirement  |   No comments

The Great Recession took many people by surprise and forced them to take a look at their spending habits. In order to stay afloat, millions of consumers were forced to reduce their spending on non-essential items in order to save money and stick to a…

saving money in your budgetThe Great Recession took many people by surprise and forced them to take a look at their spending habits. In order to stay afloat, millions of consumers were forced to reduce their spending on non-essential items in order to save money and stick to a tightened budget.

While the economy is slowly recovering, people are continuing to search for ways to save money. Downsizing is one way to hold on to your hard-earned cash. By swapping out a more expensive purchase—a latte from the local coffee shop—for a less expensive one—a homemade coffee drink—you save money while maximizing every dollar available in your budget.

There are obvious steps you can take, such as moving into a smaller house, eating out less often, and driving a more economical car. But there are other manageable and painless ways that you can downsize to maximize your budget that may not be as obvious.

Entertainment

Cable bills are a large expense, and they can grow significantly if you add extras such as movie channels and sports packages. Instead of paying for movie channels, switch to a DVD rental company, consider online video streaming, or purchase an HD antenna. Taking advantage of these options can save you a considerable amount of money each month compared to what cable costs.

In addition, cut back on heading out to dinner or the movies. Start game nights at home or host potluck dinners and invite friends, family, and neighbors. At-home entertainment is cheaper, and it allows for more conversation and intimacy amongst friends and loved ones.

If there’s a restaurant you really want to try, see if you can dine outside of dinnertime. For example, some restaurants offer lower prices at lunch or may feature tasting menus that are cheaper than a full entrée and that allow you to try more than one dish.

Cell phone plans

American families spend thousands of dollars each year on their wireless plans. Save money by skipping the large companies with unlimited plans and choose a company that offers a fixed cost, pre-paid plan with no contract. Often, these plans offer unlimited text, talk, and data so that you don’t have to give up all of your extras—and you’ll pay nearly half the cost of a contract plan.

Another way to save money is to buy reconditioned or used phones at deeply discounted prices. They’re often just as good as brand new phones.

Clothing

When you are looking to save money, downsizing your wardrobe is key. It may seem difficult to resist the newest styles in the stores, but it will get easier when you see how much cash you are able to put away.

Stick with classic pieces such as black pants and white tops that never go out of style. Go through your closets and see how many articles of clothing you no longer wear—if you haven’t touched it in one full season, it’s time to say goodbye. Make a bit of money off of those items by consigning them to clear out space.

When you are ready to add to your wardrobe, buy your clothing and accessories at the end of each season when the prices are greatly reduced. Also, look into thrift shops—the treasures you discover may shock you.

Rent, don’t buy

Often, renting an item can be a better value than purchasing it yourself. Avoid the temptation of convenience that comes with buying anything that you can rent. You will save money as well as free up space in your home.

For example, a drill that you need for one specific home repair job can cost a fortune, and you may never use it again. On the other hand, many home improvement stores will let you rent that tool by the hour, day, or week.

Consider your neighbors as a resource as well. Start a system where you share items such as tools, books, DVDs, and garden supplies. You’ll be helping each other economically and fostering healthy relationships in the community.

Saving money doesn’t mean giving up every luxury imaginable. But with a little downsizing, you can enjoy nonessential spending without busting your budget.

Jeff Rose is a Certified Financial Planner and Iraqi combat veteran. He blogs at Good Financial CentsSoldier of Finance and Life Insurance By Jeff.

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