Needs Over Wants: How To Cut Monthly Spending

needs vs wants

Steps to reduce overspending every month

If you’re having trouble overspending, the problem can be summed up in the following four words: More months than money. How do you solve that problem? First, look at where your money is going. To reduce your spending in a meaningful way, track every dollar for a solid month. Preferably two. From there, try this three-step approach. 

Step 1. Start With the Little Things 

Start by looking at your smallest expenses first. That could be takeout, rideshares, impulse purchases, or subscriptions. Ask yourself how much you could reduce each of those things and whether or not there are some you would wipe off the list completely. Once you make a change, keep tracking to keep yourself honest. 

Step 2.  Move to the Medium-Sized Expenses 

Medium-sized expenses like insurance premiums, prescription drug costs, housekeeping and lawn care, and car payments are often prime trimming territory. Find ways to lock into a lower cost so you don’t have to shop rates month after month. Here are a few examples:

  • Shop for a cheaper price on home and auto insurance (you should do this yearly). 
  • Use an app like GoodRx to cut costs on prescriptions. 
  • Schedule housekeeping and other maintenance appointments further apart.
  • Refi your car payment (particularly if your credit score has improved). 

Note: Some of these may only hit your budget quarterly (like insurance payments). Make sure you’ve tracked for enough months that you’ve captured them all.  

Step 3: Look at the Big Line Items

If, after cutting small and medium expenses, you are still coming up short, then look at your largest expenses. Cutting back on things like housing, cars, private education, and childcare is not an easy choice to make, but if the alternative is sinking deeper into debt each month, you have to look at everything – big and small.  

Note: Your financial life has two sides to it – the money going out, yes, but also the money coming in. Consider looking at ways to increase your income as well.

Jean Chatzky

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