A lot of people get carried away with their spending habits. With the easy availability of credit, it is quite tempting to go on a shopping spree now and then.

While some shopping is necessary for living a good lifestyle, we should never go overboard with credit card debt. Since most Americans live paycheck to paycheck, they also find it difficult to build wealth, which is a crucial necessity for long-term prosperity.

In this blog post, we are going to go over eight ways to cut your expenses that will help you with building wealth and starting your journey to financial freedom and prosperity.

1. Take Account of Your Spending

Suppose you start a diet to cut down on fat. What is the first thing that you do? You will probably begin by measuring how many calories you consume daily. You then start reducing your caloric intake and start working out to consume more calories to lose weight successfully.

Cutting down expenses works the same way. If you don’t know how much money you are spending, and where, you may end up spending hundreds of dollars on expenses that you don’t even remember. So many people have a gym or club membership that they don’t even go to and keep paying for months.

Begin with tracking where your money is going and how much you are spending in each area. Create a spreadsheet with different categories of expenses to keep track of how much you are spending on a weekly and monthly basis and get a good idea of your expenditure.

When you write down everything in a notebook or a spreadsheet, you’ll find it easier to examine each purchase and spend more consciously.

2. Create a Budget

A budget is a simple financial tool where you note your expected income and expenditure for the future. The budget is beneficial for planning your expenses and allows you to control mindless shopping that many people do on a whim. It helps in giving a direction and purpose to your expenses.

When you have a planned budget, you will consider it every time you are about to make an expense. While it is possible that you may not meet your budgeted targets every time and your expenses go over your planned budget, it will play a significant role in reducing your spending habits.

3. Control Your Credit Card Expenditure

Your credit card balance is one of the most expensive types of credit you can get. Even the lowest interest card charges you a hefty 9.99% on your monthly balance. It doesn’t seem like a lot because you could be paying only $40 – $50 per month on a rolling balance, but it is an unnecessary expense that can be eliminated if you pay off the balance.

This is not to say we are against credit cards. They can be useful financial tools when you use them with sound financial sense, like for building a strong credit score. If you only use them for shopping on unnecessary shoes, clothing, vacations, or entertainment, then you are better off without one. Consider getting rid of all cards, which brings us to our next point.

4. Consider Paying With Cash Only

To cut spending and lower debt, you will need to stick to the budget. Just creating the budget on paper and continuing with old spending habits will do you no good.

One way you can achieve this is by going cash only for the time being until you get things back on track financially. Limiting yourself to a certain amount of money can result in significant savings.

All types of plastic money and online cash-free transactions are designed to promote a habit of spending and commercial activity. You will spend more money if completing the sale transaction is easier and quicker.

When you limit yourself to paying with cash only, you will effectively close yourself off from spending money on many goods and services that are available online or through credit card payments. It is going to be inconvenient for a while, but it is the most effective way to limit your spending.

5. Consider Going Pet-Free

Pets are great companions, but they are also expensive. A cat or dog can cost you thousands of dollars each year in food, grooming, and medical expenses.

If you don’t have a pet, we suggest holding off on the idea until you have some money saved in the bank and start earning a little bit of passive income. If you already have a pet, be aware of the costs and look for ways to cut back. Your dog may enjoy receiving a new toy every month from your fur baby subscription, but even $20 a month adds up, especially if you are living above your means.

6. Watch Your Food and Drink Expenditure

When you track your expenses, you will find that food is one of the most variable expenses on the list. It is also one of the most controllable. You can spend $5,000 on food and drinks every month. You can also manage the whole month in just under $500, without compromising on the quality of food.

Reduce the number of take-out meals and fancy dinners at restaurants. Lower your trips to the bar with friends to 1 or 2 for the month. A picnic date or hanging out with friends at home watching movies can be just as much fun as going to a fine dining restaurant or an expensive club with your friends.

Take it from someone who has been there. You are not missing out on much. You should expect a big dent on your wallet and stress at the end of the month when the money runs out.

7. Look for Monthly Recurring Subscriptions

Monthly recurring subscriptions can be one of the fastest ways to reduce your overall spending. Many of us have multiple monthly subscriptions that we do not even remember. A few examples of monthly subscriptions are:

• Credit monitoring (Most banks or credit cards offer this for free)
• SAAS (Software as a Service) Adobe, Dropbox, etc.
• Lifestyle subscriptions (Clothes, pets, wine, etc.)
• Streaming Services (Hulu, Netflix, Prime, etc.)

If you decide you want all your subscriptions, consider moving to an annual plan since many of the subscriptions will offer you a substantial discount. Be careful if you are putting this on a credit card as it could end up costing you more if you do not pay it off.

8. Cut the Cable Bill

Cable bills keep getting larger and larger, with most averaging around $120.00. That is almost $1,500 a year. If you can drop cable/tv altogether, that is best but probably unrealistic for most or just drop it for a few months until you can get your spending under control. If you want to keep some kind of entertainment, consider switching to a streaming service like Netflix, Hulu, or Amazon Prime. Many of us already have Amazon Prime, and their video content keeps getting better and better. Be careful and make sure you do not subscribe to multiple services, which could end up costing you more.

Summary

It is vital to control your expenses to build wealth and have stable finances in the long run. If your expenses are out of proportion and you don’t keep track of where your money is going, you will end up in massive debt and grave financial difficulties, sooner or later.