If you're looking to spend less money in order to meet a larger financial goal, you might find yourself making promises that are hard to keep.
Let's say you usually spend $100 a month going to the movies. It might be tempting to cut that from your budget because, in theory, you'd save a significant amount of money. However, if this is a ritual that you enjoy, you might be setting yourself up for failure.
In order to successfully cut spending, start smaller, says Kevin Mahoney, CFP, founder of Illumint in Washington, D.C.
"You can probably identify one or more things that you are spending money on with some consistency that doesn't bring you a lot of value," he says. "If you can recognize that, then you have a great opportunity to transfer those dollars from a habitual purchase that doesn't get you much to this other thing."
For example, instead of saying you're not going to go to the movies, tell yourself you're not going to get popcorn or drinks while you're there. This could be a doable way to reduce your bill.
"When you're trying to achieve a financial goal, you don't want it to feel punitive," he says.
Here are three ways to make small cuts that can save you up to $1,000 a year, according to financial experts
Instead of vowing that you'll never go out to eat, you can take steps to reduce your dinner or lunch bill.
This is what Bernadette Joy, a money coach and the founder of Crush Your Money Goals, did. She and her partner paid off $300,000 in debt in three years, in part by cutting their spending significantly.
One sacrifice they made was to eliminate spending on drinks. This includes not just alcohol but anything that isn't water. "While we still eat out, we can stretch our food budget by cutting out drinks and just ordering the meals," she says. "Soda and alcohol just have such a high mark up, especially after tax and tip."
She and her partner took the rule a step further by also applying it to their drinks outside of restaurants.
"At home, we also don't buy flavored drinks anymore," she says. "Instead, I buy lemon or lime juice and squeeze that into my water, but can also use it for cooking if I get tired of drinking plain water."
Overall, this saves her about $1,000 a year.
"When I go to the grocery store, I am the type of person who will just grab what I feel like and before I know it I have way more than I planned to spend," Joy says.
Instead of giving herself a tight budget or telling herself she can't buy certain items, she puts back one thing before checking out.
"It might be something I just picked out in the moment and realize I don't want that much, or it might be something I can just plan to buy the next week," she says. "I got motivated by this because I still like to pick what I want without much planning, but I am easily swayed by sales and things that just look delicious in the moment."
This saves her about $5 to $10 a week, she says, which can add up to over $500 a year.
Subscription streaming services can add up quickly and together can sometimes exceed the cost of cable, says Chris Browning of Popcorn Finance.
Instead of cancelling all your subscriptions in the spirit of finding a hobby or reading more, you can put your streaming services on a rotation and evaluate every few months which ones you want to continue to pay for.
"Try limiting yourself to one or two streaming services each month," Browning says. "If there are a handful of shows that you're interested in watching on Netflix, commit to only watching those shows for the next month. After you finish watching those shows, pause your Netflix subscription and then subscribe to another service like Hulu or Disney+."
Let's say you're subscribed to the lowest priced plans for Netflix ($10 a month), Hulu ($7), Disney + ($8), and Discovery + ($5). You'd be paying $30 a month. After looking up which platforms have shows you're interested in watching, you might be able to get rid of all but Hulu. This would save you $23 a month and more than $60 over three months.
Plus, you won't feel like you're missing out, he says: "Over the course of the year, you can still watch all the shows that you're interested in across multiple services."
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