One Simple Shortcut To Put More Money in Your Budget


I know I’ve shared before how dismal the economy is where I live. It’s now been nearly two years since the price of oil fell from over $100 per barrel, and with it my city has shed morale even faster than it shed jobs. On the upside (for some), the bad economy is taking its toll on real estate and driving prices down. This is affecting both housing prices and rents.

With our lease due for renewal in July, my husband and I asked our landlords for a lower rent. We had a lot of bargaining power — we even sent a listing for a similar unit in our building for $250/mo less than ours. Additionally, we found a half-dozen comparable apartments nearby, with cheaper rents that we could move into if our offer was refused. Thankfully, it wasn’t. We succeeded in lowering our rent by 20%, saving us hundreds of dollars per month — all of which is going to be promptly redirected to savings.

We didn’t need to do this, but since we’re aggressively trying to bolster our own $100,000 house down-payment fund, shaving any amount we can off current expenses is essential to reaching our goal.

Adjust your budget when you want to make headway on a big financial goal

If your budget is serving you just fine (but be honest about this), you don’t need to make changes to it. I’m of the mindset that if you’re cool with how your spending your cash in every category, there’s no reason to mess with a good thing.

However, if you feel like you’re not making enough progress on your debt repayment and/or want to save more money each month, it’s time to change things up.

Unfortunately, when you go looking for ways to keep more money in your bank account, most financial advice is low impact — or too difficult to execute

It’s all well and good to tell someone to stop buying coffee or axe their take-out lunches, but usually these tactics will leave you in a really bad mood for a very small payoff. I’m not saying these aren’t worth actions to take in order to tighten your budget, because they are, but there’s a shortcut:

Identify your three largest expenses, and strive to cut one (or all) by at least 15%.

Cutting a big expense by 15%+ is much more effective than cutting small expenses in half

Say you’re spending $1,000 per month on something. If you can reduce this by 15%, you’ll save $150 per month, or $1,800 per year. If you try to reduce something like your $300/mo grocery budget by the same amount, you’ll need to ration your meals so you only eat every second day. A poor strategy from a nutritional standpoint.

Unfortunately, you’re not better off cutting your grocery budget by the same 15%, because it will only save you a whopping $45 which isn’t insignificant, but certainly doesn’t pack the same punch as $150. This is why it’s a much better strategy to tackle big expenses instead of small ones.

For many young people, the largest expenses in their budget are:

  • Rent/mortgage
  • Car payment & associated vehicle costs
  • Debt payments

Since these are all essentially fixed expenses, people tend to glaze over them when looking for areas to trim the fat from their budget — but doing so means you might be missing a huge opportunity for savings.

When it comes to your rent, you can negotiate for a lower rate just like I did, or you can opt to move to a cheaper place. It might mean downsizing, increasing your commute by a few minutes, or even moving out of the neighborhood with your favorite coffee shop, but if it shaves a few hundred dollars off your monthly bills, it might be a worthwhile undertaking. Mortgages are trickier, and refinancing at a lower rate might be your best option, but other ways to lower your cost of living can be taking in a roommate or temporarily leasing your guest room on Airbnb.

One of the best things you can do is get rid of your car and commit to taking public transit or walking/biking to work (maybe you’ll live close enough after your move to a cheaper apartment?). In North America, we’re all very attached to our vehicles, to the point where we accept them as a necessity. They’re not. And if you can go without, it will make you rich.

As many as 2/3’s of people underestimate the cost of driving by more than $4,000. This means, chances are you’re not actually aware of how much damage vehicle ownership is doing to your wealth accumulation. From 19 to 29, I didn’t have a car and relied entirely on public transit and walking to get everywhere. I still credit that choice as the single most important factor in being able to pay my student debt off as fast I did. Even now, my husband and I share only one car, and keep costs low by minimizing the amount of driving we do.

If your debt payments are a huge part of your budget, keep paying them. The easiest way to reduce the amount of money your putting towards your debt each month is to get rid of the debt. Ha! You weren’t actually expecting me to tell you to lower how much you’re putting towards your debt, did you?

But your small expenses might actually be big

You can be clever and separate your expenses into minuscule categories like “dining out”, “alcohol” and “coffee” to avoid coming to terms with the fact that you’re dropping $700 per month on going out. I know these tactics, I’ve used them myself. But if you’re spending more than $500 on one single category, even if it’s at two dozen different stores or restaurants, it still counts as a big expense that you can hack by 15%+.

So while it might seem useless to trim your daily lunches from your routine, cutting your entire restaurant budget by 15% is a worthy move. Unfortunately, axing any luxury your currently enjoying — from drinks every day after work to a spacious apartment — will likely be painful, but if you have a bigger financial mission in mind, you’ll be glad you did.

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9 Comments. Leave new

  • Our insurance payments have been looking a bit high for our liking and we are finally starting to shop around. It could be hundreds back into our wedding fund that means less goes on the credit cards.

  • Our rent is increasing again here in Vancouver. For a 1-bedroom, 675 sqft apartment we are paying $1,630 (which includes 2 parking stalls). Unfortunately in Vancouver the rental market vacancy is less than 1% right now, even if we do move it will be to a shittier building for a tiny decrease in rent.

    My boyfriend recently has started walking to work, he stopped paying the insurance on his car (storage insurance only) which saves us over $200 per month. That helps somewhat!

  • Some great points Bridget – I think this is a great way to tackle cutting expenses that almost everyone can put to good use. I think the biggest hurdle for a lot of people to get over is feeling like they are entitled to spend a certain amount on things regardless of their situation. Hopefully even those people can buy into cutting out 15% though – reduction always hurts less than elimination.

  • The major essentials are definitely the best place to start – housing, transit, food, insurance, phone, etc. I always tell people to brainstorm three to five ways to cut, reduce or renegotiate each. They don’t have to implement any of the things they come up with – as long as they get into the habit of challenging those expenses, they can then realize the alternatives and know they’re making a conscious choice to reduce or not reduce them. It winds up being a big a-ha moment and kind of empowering, cause you strip away the “there’s nothing I can do about it” excuse.

  • I just read this post for the second time and realised I actually don’t have any of those 3 expenses. We’re currently living with a family watching their kids randomly, buying the groceries every other week and helping cook/clean as rent payment and we don’t have a car. I am currently able to save 2/3rd of my monthly pay, we are very lucky. Next year will definitely be a completely different story.

  • Great post! EVERYTHING is really a choice and a balance of pros and cons. So many times it seems like you’re stuck with only one or two options, but thinking creatively often presents a third.
    You didn’t have to move nor continue to pay higher than market rate rent.
    Nice work on your negotiations.

  • As a fellow Calgarian, I know what you mean about the poor state of our economy. The upside as you have mentioned is bargaining power for renters and buyers. My husband and I recently moved from renting a 1 bedroom to a 2 bedroom within the same quadrant of Calgary SW, and actually save $69/month doing it. This $ of course will be going to savings.
    In terms of cost to own a vehicle I completely agree. It was not until my husband needed a vehicle for his work that we bought one car for $3k at a car auction in Calgary. It drives great, insures well and has given us no problems. The up side was that by the time we needed to spend money on a vehicle, we were able to go from $120k of debt to the last $12k. This small adjustment allowed us to still pay off the debt in 2.5 years as planned. I always enjoy reading your post. Thanks for sharing your experience.

  • That’ great about the lower rent, well done! I did something similar last month as my lease was up for renewal. In the end I was able to save 10% for my renewal rate. Other expenses I’ve been able to lower in the past year were car insurance and cable. Sometimes you just have to ask!


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