If you are looking for a way to cut back on expenses as much as you possibly can. An essentials-only budget could help. Here’s our advice for how to do that.

Where to start

The first step is to go through what you’re currently spending money on. That will make it a lot easier to find opportunities to cut back. Go through your last few months’ bank and / or credit card statements and make a list (or spreadsheet) of all your typical monthly expenses, including how much you spend on each one. You can also use an online budget tracker or app. Include your fixed costs, aka things that are the same each month (like bills) and things that change each month (like groceries).

Here are a few ideas about where you might be able to trim.

Try to negotiate certain expenses

Fixed costs are a really good place to start because you’d save that money every month. Look at things like your cell phone contract, your internet service, even electricity — there are states out there that allow you to choose your electricity provider. Call and see if they’ll negotiate with you on price. You can also shop around for things like car or home / renter’s insurance.

If you have debt, you can also try to get your interest rates lowered. That can save you a lot of money in the long run. Call your provider and ask if they’ll lower your rate. Putting your student loans on autopay, if you can, might get you a discounted interest rate. Look into refinancing them if they’re privately held. Look for other credit card companies offering 0% balance transfer offers to help you save on your credit card debt.

Look for things you can live without spending money on, at least for now

Next, put each of your remaining expenses in a bucket: essential, cut back, pause, or cancel. Be really honest with yourself about what you need and what you don’t. These decisions don’t have to be permanent.

Everyday expenses

Swap some brand-name things you usually buy for more generic options. Consider holding yourself to a 24-hour waiting period on impulse purchases to make sure you’re making the decision with a clear mind and purpose.

Meals and groceries

Planning your meals is oft-cited money-saving advice because it works. Once a week, plan out what you want to eat that week (we’re here for homemade pizza). Many grocery stores run weekly ads — check yours so you can plan your meals around what’s on sale. While you’re at it, do a little online comparison shopping — maybe the grocery store a few blocks further away has better prices. Use your meal plan to make a grocery list to bring with you when you shop.

Make a spending plan

Once you’ve identified places where you can cut back, use the information you’ve gathered to make yourself a spending plan each month. The word “budget” can feel overwhelming — especially if you know you don’t have much money to work with — but tracking your spending and staying in control is way less stressful than flying blind. Here’s some advice for making a spending plan.

If you need to cut even more

If you’ve cut, paused, and canceled as much as you can and you’re still having trouble making ends meet, there are some emergency levers you can pull.

Request forbearance (or later, deferment) on your student loans

This is a better solution at the moment than it would usually be, if you have federally backed loans. Forbearance gives you a temporary reprieve from payments, but it’s typically not a perfect solution, because interest would continue to accrue on the loan and the amount you owe would keep going up.

If you’re making contributions to a retirement account, pause them

We don’t usually recommend this, especially if you have a 401(k) employer match, but if money’s really tight, it could be an option.

Switch your student loans to an income-based repayment plan

This option is one of the biggest benefits of federal student loans. Income-based plans typically last longer, so you’ll pay more in interest over time, but they can really help alleviate the pressure right now.

Try to negotiate a new payment plan with your credit card or loan providers

Many lenders would rather work with you than have you stop paying your monthly minimums altogether. If you can’t afford your payments, call them and see if they can help you lower them.

Need more guidance? Budget some time for a complimentary 15-minute consultation with an Ellevest CFP® pro. 

Disclosures