If you aren’t great at budgeting your money, trying to tighten your spending can sometimes end up costing you more money if you aren’t doing it the right way.
Small savings — like cutting out the extra trips to Starbucks and not going out to eat so much — can definitely add up over time. But there are some bigger and better ways to cut your monthly expenses by hundreds of dollars.
How saving strategies can backfire
Here are some ways you may be wasting money by trying to save:
- Waiting for the best deal possible. If you see a great flight deal, grab it. Waiting for the perfect deal could end up costing you more if prices go up and don’t drop again. This applies for other great deals as well. If you see a great price, grab it, and if the price drops even lower down the road, most retailers will match that lower price if you bring your receipt back in to the store.
â€‹Read more: Free apps help you find the best prices
- Aiming too low with savings. Cutting out small expenses is a great start, but reducing your bigger monthly bills is the best way to save big chunks of money.
- Spending less without saving the extra money. Not spending isn’t the same thing as saving. Make sure that extra money not spent is actually being saved.
- Spending too much time and effort to save a few bucks. If you drive around town looking for a few extra savings, it could end up just costing you extra money in gas. If you want to reduce certain expenses — such as grocery bills and gas — do it strategically.
Ways to drastically reduce your expenses
- Lower your existing monthly bills by negotiating with the companies you already do business with. Here’s how.
- Here are two ways to cut your monthly pay TV bill in half.
- Switch carriers to cut your monthly cell phone bill by 60% – 75%. Here’s how.
- Get free extra storage for your smartphone — instead of paying for a bigger capacity, more expensive one.
- Switch to a Wi-Fi cell phone plan instead of paying extra for data.
- Shop around for better rates on other monthly expenses, like car insurance. Here are the best auto insurance companies.
- Switching to Aldi can save you 33% or more on groceries.
Read more: How frugal folks can save even more
Once you cut spending, make sure to save the extra money
Once you start cutting your monthly expenses, the next step is to make sure you’re actually saving that money! Here are a few tips:
- Spending less is not the same as saving — the money you don’t spend has to go into a savings account, or some other type of account you can’t easily access while out spending, in order for it to become savings. Here’s how to get your finances in order in 30 days.
Set aside money at the start of each month. This is a strategy often referred to as ‘paying yourself first’– you deposit money into a savings account at the beginning of the month. The reason to do it: It prevents you from reaching the end of the month and realizing you’ve already spent too much to save.
Use cash instead of plastic — and save the change. Online banking and debit cards have allowed consumers to become looser with their money. By taking out hard cash from the ATM and spending only what you withdraw, you can limit your splurges. You can also save up all the coin change from your purchases and deposit it into a savings account at the end of each month.
- Here are some ways to make sure that money not spent actually becomes money saved.