If you’re thinking of giving up a good paying job or just wanting to live on less to rid the stress and opt for a simpler life, you might be wondering how to downsize your spending. Here is what worked for me.
I wanted a less stressful life. For me, like many, it meant freedom from feeling trapped in a position and suffering from unhealthy chronic stress levels.
I should state here: I’m not a financial advisor and I don’t pretend to be one. I’m simply sharing what has worked for me, to inspire you or help you to achieve your goal of living with less to reduce stress.
Rushing into cost-cutting measures without proper consideration can lead to hasty, uninformed decisions that may have negative consequences in the long run. So it’s best to prep ahead. I pre-planned for months beforehand.
Here are some of the 101+ ways I save money everyday. These I used to tighten our budget and limit unnecessary spending before taking the leap, but they are useful as ongoing strategies as well.
If you’re looking to work at home, see my tips on setting up your home office.
1. plan, rethink, decide on ways to save $$
Taking the time to plan and rethink expenditure decisions can lead to more effective cost-cutting strategies and a more sustainable financial future.
- Analyze expenses and identify areas where savings can be made.
- Where do you spend the most money in a year? For us, it’s on food – it’s typical. In which case, you’d think about ways to save on your grocery bill.
- Make informed decisions about financial goals while avoiding unnecessary risks. What sort of holidays do you envisage?
- Put savings away into future income streams while you still have the dosh coming in.
2. Swap services and covers to get a better deal
By streamlining your phone, internet, and insurance plans to match your current needs, you can reduce the clutter in your life and enjoy a more focused and stress-free lifestyle. There may also be better deals out there.
- If you’re still paying for services of insurance, internet, and phone plans that are designed for your full-on domestic lifestyle, check to see what you can get away with downsizing in your leap to free yourself from shackles.
- Seek prices/quotes from your current as well as other service providers or platforms to see if you can get better deals than what you have already.
- If you’re downsizing accommodation-wise, you may want to consider a home insurance policy that is tailored to your new space, rather than continuing to pay for higher coverage.
3. identify spending pits
Check your financial statements for transactions that you identify as spending pits. Here are the benefits:
- You get a picture of your spending habits over time
- You can track your expenses and identify areas where you may be overspending
- It allows you to identify any unauthorized transactions or errors in your account
- It helps you plan and budget for future expenses
- It enables you to make informed decisions about your finances and adjust your spending habits accordingly
4. identify subscriptions you can do without
Identifying and canceling unnecessary subscriptions before retirement or letting go of a high-earning job has these benefits:
- Cutting monthly expenses that can be redirected towards savings or other financial goals
- Reducing clutter and simplifying finances, making it easier to manage expenses
- Avoiding the risk of forgetting to cancel subscriptions and being overcharged
- Helping to create a realistic budget for your simpler life by eliminating unnecessary expenses
It’s important to evaluate which subscriptions are truly necessary and prioritize those that bring the most value to your life. An example might be subscription magazines — someting I found I can read for free online through my local library.
5. Follow up on automatic debits to lenders
Automatic debit transactions to lenders offers convenience and timely repayment of loans. However, it’s important to be aware that some lenders may continue to charge fees even after the loan has been fully paid off.
These fees can add up over time and become a burden for borrowers. It’s crucial to carefully review the terms and conditions of any loan agreement before signing up for automatic debits to avoid unexpected fees down the line.
- Technical issues: Technical problems with the lender’s system can also result in automatic debits continuing even after the debt has been paid, resulting in additional fees.
- Fraudulent activity: In some cases, fraudulent activity may result in automatic debits continuing after the debt has been paid, leading to fees and potential financial harm to the borrower.
6. Consolidate debts into one with the lowest interest rate
This approach can be particularly helpful for those with high-interest credit card debt or multiple loans with varying interest rates.
- Consolidating debts into one lower interest rate loan can simplify your finances by reducing the number of payments you need to make each month.
- It can also potentially reduce your total interest payments over time, allowing you to pay off your debt faster and save money in the long run.
- You may be able to secure a lower monthly payment, making it easier to manage your budget and avoid missed payments.
- Consolidating debt can also improve your credit score by reducing your overall debt-to-income ratio and showing lenders that you are actively working to pay off your debts.
The cheapest interest could be through your home loan. If you have equity you might be able to consolidate other debts here. Consult an advisor.
7. Choose a credit card without reward points – i.e., has no annual fees
When it comes to credit cards, if you’re like I was at first, you’re drawn to attractive reward programs. Now, I recommend choosing a credit card without reward points.
While reward points may seem enticing, I found the earned rewards didn’t offset the fees.
Not to mention, the rewards were not always as valuable as they appeared. By opting for a credit card without rewards, you can save money in the long run and focus on building a solid credit history.
- Choosing a credit card without reward points and no annual fees can save you money in the long run.
- Cards with reward points often come with high annual fees that can add up over time.
- The rewards earned from the card may not offset the cost of the fees, making them not worth it.
- A card without reward points and no annual fees can still offer benefits such as cashback or low-interest rates.
- Choosing a card with no annual fees also means you won’t have to worry about canceling the card to avoid fees.
8. Have your credit card set to pay out in full each month
Paying your credit card in full each month is a smart financial habit that can help you avoid costly interest charges and improve your credit score. We’ve been doing this for many years.
By paying the full balance on time, you demonstrate responsible credit behavior and avoid accumulating debt.
It’s an easy way to stay on top of your finances and ensure that you’re not spending more than you can afford. Plus, by avoiding interest charges, you can save money that can be put towards other financial goals.
- No interest charges on outstanding balances
- Improved credit score due to consistent on-time payments
- Avoidance of late fees and penalties
- Greater control over expenses and budgeting
- Potential rewards and cashback benefits on purchases
- Reduction of overall debt and financial stress.
– otherwise avoid credit cards
Reasons to avoid credit cards…
- High-interest rates can lead to accumulating debt
- Credit card companies may charge fees for late payments or exceeding credit limits
- It’s easy to overspend and lose track of expenses
- The temptation to make impulsive purchases can lead to financial instability
- Credit card debt can negatively impact credit scores and future financial opportunities.
9. Instead of a credit card. Use a prepaid card to buy goods and services online or in person
Prepaid cards are becoming an increasingly popular alternative to traditional credit cards. They work by allowing users to load a certain amount of money onto the card, which can then be used for purchases just like a credit card.
Here are some benefits of using a prepaid card instead of a credit card:
- No interest charges: Prepaid cards don’t charge interest, which means you won’t have to worry about paying back more than you spent.
- No credit check: Unlike credit cards, prepaid cards don’t require a credit check, which makes them a good option for people with poor credit or no credit history.
- Better budgeting: With a prepaid card, you can only spend the amount of money you’ve loaded onto the card, which can help you stay on track with your budget.
- Security: Prepaid cards can be a more secure option than credit cards because they’re not linked to your bank account or credit score.
- Convenience: Prepaid cards can be used just like credit cards for online shopping, in-store purchases, and even ATM withdrawals.
10. Install an option to generate own power (e.g. solar) so you no longer need to pay for electricity
An option to generate your own power, such as solar panels, can eliminate electricity costs. Benefits we receive, include:
- Decrease in monthly bills
- Reduction of carbon footprint
- Increase in energy independence
- Potential for profit through selling excess power
- Long-term savings on electricity costs
11. Cut back on bought coffees to save ~$X a day
Cutting back on buying coffees can be a great way to save money. By simply making coffee at home or bringing it with you, you could save a significant amount of money over time.
Consider the following benefits of cutting back on bought coffees:
- Saving money: By cutting out just one or two bought coffees a day, you could save anywhere from $3-$10 a day, which adds up quickly over time.
- Environmental benefits: By using a reusable mug or making coffee at home, you can reduce the amount of waste produced by disposable cups and coffee pods.
- Enhanced creativity: Brewing coffee at home can be an opportunity to experiment with different brewing methods and flavors, allowing you to expand your coffee palate.
12. Cut back on bought lunches. Make and take your own lunch
Cutting back on bought lunches can be a simple yet effective way to save money and improve your health.
By packing your own lunch, you can take control of your diet and reduce your spending on eating out. Here are some benefits of making the switch:
- Save money in the long run
- Control the ingredients and portions of your meals
- Make healthier food choices
- Reduce waste and support sustainability efforts
- Have more time to enjoy your break instead of waiting in line
13. Repay home loan faster with savings made. Try a budget challenge
Paying off a home loan can be a long and daunting process for many homeowners. However, there are ways to accelerate the process and reduce the overall interest paid on the loan.
One effective strategy is to use savings to make additional repayments, which can have numerous benefits, including:
- Reducing the overall interest paid on the loan, which can save thousands of dollars in the long run
- Shortening the loan term, allowing homeowners to become debt-free sooner
- Building equity in the home at a faster rate
- Improving financial security by reducing the amount of debt owed
- Increasing cash flow by reducing monthly mortgage payments
- Providing peace of mind and a sense of accomplishment in achieving a major financial goal.