So you've come as far as utilizing the cash stuffing method, and it's working as planned. But, you're struggling to stretch your cash to save more money. This can be discouraging and difficult to stay focused and on track because you feel stagnant even though you're successfully budgeting.
The solution to overcoming this hurdle is to analyze your spending habits further and make adjustments here and there. In addition, stretching your cash often involves making sacrifices and adopting new alternatives to your everyday lifestyle.
Now that we know the essence of stretching a budget, let's break it down with simple and creative ways to start saving money to help you reach your financial goals faster.
Audit Your Budget - Let’s Have a Look
Above all, you need to know how every dollar is being spent and what areas of opportunity you have to save extra money. First, you will need to review your monthly budget by reviewing every category individually. To do this, separate your expenses into three categories;
Fixed Expenses: This category will include expenses such as mortgage/rent, homeowners insurance, cell phone bill, property tax, health insurance. These expenses are sometimes tricky to negotiate for a reduced price but still possible.
Variable Expense: This category will include expenses such as utilities, gas, groceries, and household maintenance bills.
Miscellaneous: This category will include expenses such as clothing, personal items, dining out, entertainment, gifts, hobbies, pets. Miscellaneous items are most often the more manageable to reduce.
1. Needs vs. Wants
Now that you've organized your envelopes into their respective categories, go through each envelope and remove anything you can do without. For example, if you spend on average $75 monthly on dining out and $75 on optional personal items, you might want to consider challenging yourself to omit these categories entirely. Even if it's for a short period, it will help you become accustomed to spending less on unnecessary items; it's worth it in the long run. Remember, dining out is a ‘want’ and should always be replaced with cooking meals at home if you’re trying to stretch a budget. Personal items are needed, but most Americans far overspend, so analyze this category thoroughly.
Suppose you successfully removed these expenses from your budget, saving $150 each month. At the end of 12 months, you will have saved $1800. As this demonstrates, stretching your budget over the long term can transform your financial situation completely.
Another alternative is to review expenses such as your cell phone bill, internet bill, and streaming services. Consider this statistic; the average American spends $39 monthly on streaming services and $50 on their cell phone bill. A streaming service is a luxury, and if this is something you are subscribed to but trying to find hacks to stretch your budget, this is an excellent opportunity to save an additional $39. Cutting this cost can save you $468 after 12 months. And an unintended bonus is that you will have more time to adopt healthier, more productive activities in place of watching television shows and movies.
There are many cell phone and internet providers in America, so call your provider to inquire about more affordable monthly plans. Most companies are prepared to offer you a deal to retain you as a customer. We often overspend on these expenses because we want the quickest internet and the best phone package. By switching to a more affordable package, you will realize you didn't need all the add-ons to begin with.
The most important financial lesson in this step is distinguishing between a need and a want. Once you've mastered that, stretching your budget will become considerably more manageable.
2. Regularly Review Your Grocery Budget
In most cases, your monthly grocery expense is the culprit in preventing you from stuffing more cash to save. The two most effective ways to cut this expense are; shopping off a budget list and shopping for deals.
Your grocery list should always include the essential ingredients since they tend to be the most affordable, and they can be stretched. An example list would consist of beans, rice, flour, potatoes, chicken, eggs, bread, tuna, cheese, and oatmeal. All of these items can be purchased in bulk and can be used to make long-lasting nutritional meals. It is important to remember not to deviate off the list and stay out of middle isles in the grocery store. They are set up to encourage overspending, and most of the items are highly addictive unhealthy packaged foods that encourage more spending.
The following hack is to make sure you only purchase sale and clearance items. Thanks to technology, we now have centralized access to all current and upcoming sales at our favorite grocery stores. Apps like Grocery Pal are an excellent way to shop for deals, so you're not overspending. Once you create an account, you have access to current and upcoming sales at all supermarkets, grocery stores, markets, and department stores, so you can plan your shopping accordingly to match your budget.
In addition to this, you can save money by purchasing in bulk if you find clearance items. Remember, the fewer trips you make to the grocery store, the more you save because you remove yourself from impulse spending. Decreasing your grocery budget doesn’t mean you’re sacrificing health; instead, it means you’re prioritizing health while cutting out all the unnecessary and overpriced food items.
3. Take Advantage of Free Activities
As part of your miscellaneous category, entertainment and hobbies typically account for a large percent of the monthly budget. It may seem self-evident that these categories should be reevaluated, but often, they are overlooked. The average American spends $3,050 on entertainment every year. While entertainment is absolutely necessary to enjoying life, it doesn't need to be this costly.
Suppose $3,050 is what your household spends on average in this category. Broken down as a monthly expense, you are spending roughly $254.00. Removing this category altogether can stretch your budget significantly. This is a lot more manageable than it seems if you take the time to seek free alternatives to your preferred forms of entertainment.
Do a quick and straightforward google search similar to "free entertainment activities near me." You will be surprised by all the savings that come out of this single search. Rather than going out to a movie, invite friends over to watch one. Consider taking a walk through a local park or hiking trail instead of going for lunch and drinks.
Take advantage of local city events or spend some time volunteering. Most communities have budget-friendly and free events all year round.
4. Minimize Driving To Save on Gas & Insurance
Gasoline and insurance, two non-negotiable expenses we're all faced with. As consumers, we don't have much control over the market price of gas, but we have complete control over how much of it we consume. The average national price of regular gasoline per gallon as of October 2020 was $2.18 and as of October 2021 it is $3.26-that's a considerable increase. With gas prices going up at this rate, your budget is inadvertently negatively impacted, which is why it is necessary to perform budget audits regularly.
So, how do you reduce consumption? Below is a list of options you can utilize.
- Carpool
- Use public transportation
- Walk or bike if the location is conveniently nearby
- Shop around for cheaper gas stations
- Never buy gas before holidays or long weekends. Prices are always raised the day before or the day of the holiday.
Review what your monthly budget for gas and reduce it by $20. If you can sufficiently make it through the month, reduce it by another $20 the following month until you know your minimum threshold. Though challenging, it can be made possible by utilizing the options above. In addition, you will become more mindful of how often you drive your vehicle by giving yourself a strict gas budget. We tend to overlook how much unnecessary driving we do just for convenience.
When it comes to vehicle insurance, the unfortunate reality is that the average American driver with no penalties or accidents under their belt overspends by roughly $417 annually. Talk about a large sum of lost money. Below is a list of options you can utilize to save on vehicle insurance.
- Shop Around. Like all other industries, insurance companies price their packages to give them a competitive advantage. Often it is the case that consumers will call into one insurance provider and settle with what they offer, assuming they're all the same. Please stay away from insurance brokers because you pay them a commission fee. You can do the same job by simply calling around and inquiring about prices.
- Inquire On Package Deals. Depending on the company, they may offer multi-vehicle packages, student packages (some even maintain your student rate post-graduation), or home and vehicle bulk packages. This should be a requirement when deciding on which company to settle with.
- Drive Less. Your insurance premium is calculated in part by how long you spend commuting or the predicted miles you anticipate to drive to and from work. Consider carpooling or using transit to save on insurance and stretch your gas expense. Another important hack is, if your employment status changes from full-time to part-time, or in-office to remote, always inform your insurance provider so they can adjust your premium accordingly.
Final Thought
Stretching your budget can be pretty tricky, particularly if you’re already maxed out. But in most cases, there are areas of missed opportunity where you can cut costs and save more. Cash stuffing makes it easier to evaluate your financial state because everything is already organized and compartmentalized. By continuing what you're doing and utilizing some of our top hacks, you will be on a great financial track.
