Ever feel like you’re absolutely hemorrhaging money? That expenses keep coming up and that your income just doesn’t seem to go far enough?
More and more people feel this way as the cost of everything from food to housing goes up. Living a financially stressful life is not good for our mental health or our money.
If you’re ready to make some lifestyle and financial changes, here are five tips to stop hemorrhaging money in your budget.
Do a Full and Detailed Financial Audit
Usually when we feel like we’re hemorrhaging money we feel a little out of control. We feel like money has us in it’s death grip and we’re just along for the ride.
The first step is to take back control by reviewing what’s happening with your money.
I like to use a free tool called Empower to gather all my financial information in one place. Empower is a free financial dashboard you can hook your credit cards, student loans, bank accounts, investments, mortgages, and even car loans to.
This overview makes it easy to see your whole financial life in one glance. From there, you can dive into each area and find out more information.
Here’s some of my July 2024 spending in Empower. I can see that I bought two items from Poshmark and something from Target. Overall, I can see that “general merchandise” comes up a lot in my credit card spending.
That tells me that general shopping might be an area I’m overspending in.
You can also use Empower to find things like late fees you might be paying, or if you’ve been double charged for something.
Doing a financial audit will help you get organized and see what your biggest and more frequent expenses are.
Focus on Big Expenses
Spending $4 on a coffee out three times a month is not going to break your bank account. Small expenses get a lot of airtime in the financial world, but you’d be much better served by focusing on your big monthly expenses.
$12 on coffee every month is not a problem. However, $2,700 a month in rent might be.
Typically, the three biggest areas of anyone’s spending is housing, food, and transportation. Focusing on lowering these costs will save you more money than cutting out those coffees.
Here are some strategies to help lower your big expenses.
Refinance- If you have a loan with a high interest rate, you may be able to refinance. Mortgages, car loans, or even personal bank loans can all be refinanced. Refinancing means you exchange your old loan terms for new loans terms: a new interest rate and a new monthly payment.
If your credit score has gone up or you’ve paid down debt, it might be a good time to refinance. Going from an 8% mortgage rate to a 5% mortgage rate can save you tens of thousands over the course of your loan.
Building good credit can take a few months. Make sure to never miss a payment and use a credit building tool to help you get there. Good credit is a very powerful tool when it comes to getting a low interest rate.
Sell- It might be time to sell something that’s too expensive for you. A car that costs you $1200 a month is not worth it when you’re hemorrhaging money in your budget.
Move-Moving our of a $3,000 a month apartment into a $1,500 a month one is a way to cut your bills. Yes, moving sucks, but when you’re focused on saving money, moving to a cheaper place is a way to cut your monthly spending in a big way.
Switch To Cheaper Providers
Switching to Mint Mobile from Verizon saved me $468 in a single year. So what are some brand switches you can make that can save you money?
A good exercise to do is to review your spending and highlight the costs that come up every month. Usually these are things like insurance, food, transportation, utilities, and restaurants.
Outside of the big expenses, what can you negotiate or switch away from?
For example, if your car insurance is $300 a month, spend 20 minutes comparing prices online to see if there’s a cheaper option. If you can get a $300 monthly bill down to $200 by switching, you just saved yourself $1,200 annually.
(PS I have been very happy with my switch to Mint Mobile! I am on the $36/month plan.)
Cut Out Your Temptations
We live in a world where billion dollar companies spend hundreds of millions of dollars a year to try and get you to buy their products. The playing field isn’t fair! The whole world is designed to get you to spend money.
One thing that puts more power in your hands is to opt out of things that constantly tempt you.
A good exercise to try is to map out a typical week in your life and then assign a cost or specific company to each activity.
For example:
Monday, you get up and commute to work ($8 in gas)
You pick up a coffee and breakfast burrito for $12.
Then you work until 1pm, when you eat the lunch you brought from home ($0)
You leave work and pick up a library book ($0)
At home, you do laundry, order groceries online, and place an order for two new pairs of shoes from Amazon. ($220)
You read your library book and head to bed.
This activity shows you how expensive each day of the week is for you, and where your biggest expenses are. With that information, you can make changes to the vendors, providers, and companies you pay.
Here, you could cancel your Amazon Prime account to save money on the subscription, and to stop you from impulse shopping online.
(I went without using Amazon for three years and it was actually very easy!)
Be Open to Temporary Lifestyle Changes
Sometimes we’re in periods of high spending we need to make changes we might not like. It’s important to remember that these changes don’t have to be forever!
When I was paying off my student loan debt, I put myself on a Target ban. I didn’t allow myself to go into Target until I was debt free, because I always spent way too much at Target.
After I paid off my debt, I started going to Target again. I’ve been to Target hundreds of times! It was a temporary ban to help me reach my financial goals and I don’t regret it.
Here are a few lifestyle changes that you can make temporarily to stop hemorrhaging money:
Live with roommates for a year to give yourself 12 months of savings
Sell a car you can’t really afford and using public transport until you’re debt free
Giving up meat for six months
Doing a clothes shopping ban for six months
Hopefully these tips can help you save more of your money and stop the financial bleeding. Let me know if you have any other tips in the comments!
Join our weekly newsletter for more money tips.
