Do you think spending less at home can help your finances? There are times when it will, but there are also times when it might be unnecessary. That really depends on your current financial situation. It can help if you have a lot of financial obligations and not enough money to cover them. But if everything is going well and you have enough emergency fund, then you probably do not need to change anything about your spending habits.
There are many signs that your spending habits should improve. However, if you do not find one sign that tells you that it is needed, then you can feel free to enjoy the extra money that you have. You can opt to invest it or save it for a vacation. Or you can spend it on a relaxing day at the spa. If it can help your overall well-being and it will not compromise any of your financial obligations, then it is okay to spend your money as you wish.
Of course, the freedom to spend your money does not mean you should be irresponsible with it. Smart spending will always be a necessity. According to statistics, Millennials are taking up the habit of spending less – focusing on paying for their necessities. If you analyze their particular situation, you will understand why they have developed this habit. First of all, a part of this generation got out of college during the height of the Great Recession. They were loaded with debt and yet had a difficult time finding a job to pay it off. This made them timid when it came to spending.
While a lot of them have slowly relaxed their spending restrictions, they remain to be smart spenders.
Reasons why spending less makes sense
There are many reasons why Millennials are spending a lot less. Whatever they are, it is helping them develop the right financial habits that will allow them to strengthen their financial position. You might want to take after what they are doing. Their financial situation and life experiences have influenced how they spend their money.
If you want to find the motivation that will help you succeed in spending less at home, you can consider these reasons.
To save more
One good reason to spend less at home is to save more. Do you have an emergency fund? If not, use that as your motivation. You want to make sure that you are ready to finance any unexpected event in your life – like a trip to the ER or something similar. This saving goal can also for a life milestone – like buying your own home. That needs a sizable down payment. It can also be for your retirement. Whatever it is, a saving goal is a great motivation to get you to spend less each month. There are many techniques to help you save money easily. You can even trick yourself to save by setting up an automatic debit with your bank.
To pay off debt
Another great motivation is to think about your debt. If you have a lot of debts, consider the money you are wasting as you pay the high-interest rate. Take your credit cards as an example. If you only stick with the minimum payments, it will take you forever to completely pay off what you owe. The sooner you pay off the debt, the less you have to pay towards the interest. So increase your debt payments by spending less at home.
To compensate for a stagnant income
According to a recent survey, US employees have to wait longer before they can expect a pay raise – maybe in 2018. And even if there will get a raise, it will not be much. If your income is not growing, you need to start spending less at home. The cost of living continues to rise and it is faster than your income. You need to start taking that into consideration. If you do not alter your standard of living, you will end up overspending. Once you overspend, that leads to more debt. So better avoid that by just lowering your expenses.
To prepare for a shaky economy
Finally, a good reason to spend less is when the economy seems too shaky. According to statistics, household spending increased significantly in less than 2 decades. In fact, it is already back to pre-recession levels now. This is a sign that we all need to be careful with our spending. You have to start keeping tabs on what is happening around you. Listen to the news. Look at the rates coming from the Federal Reserve. You can even check the unemployment rate. Monitor the national debt. There are many places for you to look into so you know if the economy is good or bad. Open your eyes and ears so you know what is happening on a national level. This will help you make the right decisions about your personal finances.
Tips to help you lower your monthly spending
If one of the reasons to spend fewer checks out with you, that is a sign that you need to start living below your means. The thing is, there are only a couple of things that you can cut back on. Most of these are under the discretionary expenses. Your rent and debt payments are usually fixed. Unless you will downsize your living conditions, you cannot lower them anymore.
When it comes to your discretionary expenses, there are certain tips that will help you meet your goals.
Know when to buy your produce
Food is one of the most important parts of your household budget. For produce like fruits and vegetables, you can buy in bulk to get them for a lower price. Just make sure that you will really use them before they expire. This is why it is ideal to buy produce on a weekly basis. When it comes to items that do not expire easily, you can include them in your monthly shopping schedule.
Find out inexpensive substitutes
This is mostly applicable to your food budget. There is surely something that you can use that is cheaper. For instance, use a store brand instead of the more expensive ones. This can also be applied to other products that you use around the house.
See if you can bundle payments
There are many things that you can bundle – like your car, life, and home insurance. Get all of these from one insurance company so you can negotiate a lower price. Inquire with different companies and compare prices. Find out which of them can give you the insurance package that you need.
Choose between an Internet or Cable subscription
Most of the time, cable subscriptions are rendered useless – especially if you have a strong Internet connection. You might want to see which of the two you really need at home. When a company offers a great deal with you, make sure to check the length of the contract. You want to have the option to terminate it in case they cannot meet your expectations.
These are only a few of the things that you can do so spending less at home is possible. Once you have successfully lowered your spending, consider carefully what you will do with the extra money. Remember that it is your smart spending choices that will ultimately help you improve your finances. So keep on making the right choices when it comes to your finances.