How to Make Personal Budget Cuts


Budgeting is an important aspect of managing personal finance effectively. Many people have a natural tendency to shy away from the word and anything to do with “restricted” spending. For these individuals, it is important to understand the true purpose of a budget. A well thought out and realistic budget which accurately reflects your income and financial obligations does not restrict your spending. Conversely, budgets help households organize their finances by assigning each available dollar a “place”. This ensures all financial obligations as well as financial goals are met.

The main problem in most personal budgets is a lack of funds to cover all obligations and goals. Here we look at common places to cut expenses from your budget which will free up cash for debt repayment, savings or other financial goals.

Cut Back On These Budget Busters

  • Entertainment - Going out to eat, taking in a movie and season tickets at the ball park are all examples of entertainment expenses. This is usually one of the first areas to cut back when your budget needs tweaking.
  • Internet - Everything is connected to the Internet these days. Computers, gaming systems and cell phones all tie together through the Internet. This can quickly become a costly expense; one that can also be reduced. If you are not using the Internet for school or work, consider downsizing your data plans to reflect necessary usage.
  • Cable - A big budget buster for many households, cable bills account for $75 for the average American family. This price quickly goes up when you add extra channels and packages with many families paying between $100-$200 per month. Each year the price of cable goes up approximately 5% making this an important area of the budget to manage.
  • Phone - Once a luxury or used only for emergencies, mobile devices are now in the hands of almost every person over the age of 10 (sometimes younger). As smart-phones become a mainstay in American households, cell phone bills continue to creep upward. If you have a land line in addition to cell phones, you are easily spending $100 or more per month on phone bills. Look for ways to cut back by switching providers or trimming unnecessary features from your cell phone plan. Note: Before making changes to your cell phone plan, learn how usage fees and/or termination fees impact your bill.
  • Insurance - Health, automobile, life and home owners’ insurance are necessary expenses which cannot be eliminated from the budget. It is possible however to reduce these expenses by shopping for the best rates, raising deductibles or combining policies through one agent for lower prices.
  • Groceries - Families can save or waste a lot of money at the grocery store. Coupons, loyalty programs and sticking to a “list” are easy ways to reduce costs at the grocery store.
  • Utilities - Energy efficient appliances and proper weatherization are two great ways to reduce utility costs. Reducing the consumption of gas, fuel, electric and water is not only good for your wallet but good for the environment as well.

Benefits Of Budgeting Tools

At first glance, cutting costs from your budget looks fairly simple. In reality, many consumers find it difficult to implement a plan of action to save money. This is often due to the inability to see the big picture and how saving a few dollars in each area of the budget amount to considerable savings.

Budgeting tools are available which help consumers track spending in real time and pin point where cuts can be made in the budget. Spreadsheets which aide in the tracking of expenses and a budget calculator can make the difference between a budget that works and one that is constantly coming up short. Other tools may focus on managing your checkbook or tracking your savings goals. Families benefit from these tools by learning exactly how much money they are spending and where. In doing so, it becomes easier to see what cuts can be made and where savings can be found to reach other financial goals.

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