Looking to generate some extra cash for a vacation or for your child’s college fund and wondering the most effective way to go about it? You’re not alone; it’s a position many find themselves in. In recent years, I’ve discovered that our family’s expenses exceeded the income we received from stocks and property. This realization forced me to either cut down on our monthly budget or face bankruptcy.
That’s what I would call a reality check. I began tracking all of our expenses – cable bills, groceries, car payments, utilities, etc – with the goal to trim them as much as possible.
I discovered four key strategies that helped significantly reduce my monthly budget within six months. Let’s take a look at each of them:
1. Reducing Rent Expenses:
Implementing this strategy might require some major lifestyle changes. For instance, I moved my elderly mother and my brother into my three-bedroom flat which slashed over $2,000 from my monthly expenditure. While such an arrangement might not be feasible for everyone, it’s beneficial to review your current housing expenses and explore ways to reduce them.
If the conditions are right, you could even rent out unused rooms in your house on Airbnb, potentially adding an extra $600 to your monthly income.
2. Cutting Down on Grocery Expenses:
I was also looking to shed some weight, and instead of eating out or buying junk food, I began preparing healthy meals at home. This way, I saved more than $50 per week and also lost 15 pounds.
I continued to optimize my grocery budget by purchasing only the food we consumed and opting for store brands over more expensive commercial ones. This further cut down our monthly food bill by over $300.
3. Discard High-interest Credit Cards
This might be a difficult step depending on your reliance on credit cards, but it’s a necessary one. I cut down my 12% interest credit card and replaced it with a 5% secured one. Within a year, I cleared the entire debt off and switched to a cashback credit card with 0% interest as long as I cleared the balance every month. Now, I earn cashback on all my expenses, which I use to pay off the card balance every month.
4. Open a High-yield Savings Account
In 2017, when the stock market was shaky, I considered investing my money elsewhere. Online banks like CIT were offering 2.45% interest on savings accounts, which prompted me to open an account with them. Now, I earn roughly $75 to $85 a month that helps me pay off my credit card bills.
If you’ve a low-yielding savings account, it’d be a good idea to switch to an online savings account. You can use the interest earned to pay off credit card or car loan debts.
By incorporating these savings tips, I could reduce my overall budget by over 70%. I urge you to follow these steps, continue searching for other budgeting tips and cultivate wealth diligently.