Strapped for Cash? Here’s Two Ways to Find Money in Your Budget

It's an inevitable occurrence; at some point, you'll have a bonafide need for something new in your life that you won't be able to comfortably afford without depleting your entire emergency fund.  Whether it's a new car, new health insurance, or expenses for a new home, it often won't be enough to cut back and cross your fingers; this is where the art of “budget hacking” comes in handy.

I've successfully done budget hacking twice before. Once when I was twenty-seven and needed to find room in my budget for a car payment (my parental hand-me-down had died and I was in need of something reliable to get to and from work) and a second time over a year and a half later and wanted to become my own boss, but needed to shell out for health insurance.

I call it “budget hacking” because you're trying to find fresh and clever ways to reduce your monthly expenses to accommodate for something new. It's super unenjoyable to have to increase the amount you're paying each month for the “must haves” while cutting back on the fun stuff and financial goals, which is why it is important to save on the mandatory things where we can!

There are two different ways to find room in your budget for new expenses:

How to Find Money in Your Budget Every Month

Method #1 – Study Your Expenses and Reduce in the Biggest Areas

At the time I needed to purchase a new car I was stealthily plugging away 40% of my income. I was pretty proud of that number and didn't want to reduce my savings rate to accommodate something that didn't retain its value like a car.

So I took a good, hard look at my budget and found the averages of what I spend each month in most categories.

Related: 37 Ways to Save More Money

Cutting Back Where It Makes Sense

By looking at my expenses I realized I was investing a large portion of my monthly corporate paycheck into running and maintaining this blog. I considered that money an investment in myself and my future business, but I figured I needed a working vehicle more than I needed great Pinterest images for my website, so I cut this number way down to about $50 each month, and made the switch to saving for big business expenses instead of trying to cash flow every item in the month it occurred (for example, my Awkward Money Chat videos.) Total Monthly Savings: $250

I also cut down my bi-weekly sessions with my therapist from twice a month to just once, which is something my therapist and I discussed doing anyway. Savings: $50 

Adding the two together gave me a total savings of $300 each month, which was $25 over what I needed to afford the $275 car payment on a sweet 2013 Nissan Rogue. Success!

Method #2 – Haggling Your Way to Savings

In the Spring of 2015, I left my full-time job to work for my own digital content marketing business. I was excited about the next step, but everyone knows that the most groan-inducing parts of working for yourself is having to come up with your own health insurance. Even though Obamacare and the healthcare.gov marketplace have made it much easier in the last few years to obtain health insurance as a freelancer, it can still be a pain to accommodate a hefty premium payment in your budget when you're used to an employer taking care of it for you.

Last Fall, when I knew I was going to have to purchase a new car, I found the money within my existing (albeit, super loose) budget. The second time hacking my budget was slightly different; being a freelancer meant less discretionary money and categories to pull from.

I'd also already hacked my budget once before. What could possibly be left?

How to Find Money in Your Budget: Haggle Discounts on Fixed Expenses

I recommend doing a quarterly or bi-annual audit of your utility bills and other “fixed” expenses (as explained here) to identify areas of savings. I hadn't tried to lower my bills like this in over a year, so when I left my full-time job in April, I started taking every Tuesday morning for a month to call up these companies and talk to them about lowering my bills.

Here's where I was able to nab additional savings:

  • Mortgage: From 904.00 each month to 853.00/ saving 51.00 per month. I had finally become 20% vested in the property and as such asked them to take the Private Mortgage Insurance premium off my monthly tab.
  • Cable: I finally cut cable and my internet bill went from 117.00 to 84.00/ saving 33.00 per month
  • Security System: I negotiated a “customer loyalty” discount – from 48.00 per month to 38.00/ saving 10.00 per month
  • Car Insurance: I previously had both home and car insurance with one company, thinking they were giving me the best deal…and that it's, well, you know, easier. After lots of homework, I found out that I did have the best price homeowners insurance with the company, but could get a much better deal on car insurance going with another provider. The switch lowered my car insurance from 163.00 each month to 116.00/ saving 47.00 per month

How Much You'll Find

Making these small tweaks allowed me to put $141.00 back into my budget. This wasn't the total amount I needed to cover a new health insurance premium, but it's a start. After monitoring my new “work from home” spending habits for two months, I also found money in my gas budget and savings from lower dry cleaning and fewer lunches out.

Altogether I “hacked” my budget to find $269.00 for my new health insurance payment, and only had to come out of pocket the extra $58.

Fair warning: this method is a huge endeavor and time investment. You definitely have to allocate time on the calendar to it and create a plan of attack, otherwise, you'll go crazy in a circle of hell where they play automated customer service systems on loop.

The time and effort involved keeps most from doing a yearly audit of their fixed expenses, even when there are definite savings. But if you think about it, taking out $58 dollars out of a category instead of over $300.00 is much nicer.

At the end of the day, budget hacking will only cost you a few hours of time and a little bit of your sanity.

Grab our free budgeting spreadsheets. Click here to subscribe for access to the best life vault and nab access to six other worksheets while you’re in there!

Don't you wish your budget went a little farther each month? Well it can! Follow these tips to find more money in your budget for new expenses.

 

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  • Mike
    January 8, 2017 at 5:32 pm

    In my experience, there’s always somewhere to cut from! Great article!

  • Lamont Cranston
    August 23, 2015 at 6:08 pm

    Is that $35 dental insurance for one person or more? Is there a deductible?
    $420 a year seem like a lot, unless you expect dental problems ahead and know your going beat the insurance company, I don’t get dental insurance, it’s not like you could have a $250,000 dental bill.
    Insurance covers things that would change you financial life, not the usual $120 dentists bill.
    Just my two cents.

  • Hello Pre Nurse
    August 12, 2015 at 12:08 pm

    Nice job! I need to call around to get some of my bills lowered too, but I’ve already done some of the things you mention here. -Kayla

    • Lauren Bee
      August 17, 2015 at 8:43 am

      Feel free to share any additional tips you’ve learned! Would love to know more as I think bill hacking is something many folks skimp on.

  • twinklergirl
    August 11, 2015 at 2:46 pm

    Great tips! I’m sure you’ve mentioned it previously – but as I’m new to the blog, I have so much catching up to do, I know that when I had credit cards in the past, I was able to call them and request a percentage decrease on the rate and they were almost always accommodating. If you’re weighing your options for health insurance vs. lowering a monthly payment – would you consider that a viable option? I pay my cards off monthly now, but in the tighter times, sacrifices were made… 😉

    • Lauren Bee
      August 17, 2015 at 8:43 am

      Yes- when I was unemployed I had a credit card company offer me a flat monthly payment until I got back on my feet. Card companies (especially now that people are more mindful of their money since the recession) are willing to work with customers.

  • Cashville Skyline
    August 11, 2015 at 9:05 am

    Yes, such a smart way to plug up money leaks! I’ve reduced my cell phone bill, health insurance (when I was paying for half of premiums at my last gig), car insurance, internet bill, and recently, my monthly gym expense. I haven’t tried hacking utilities, though.

    • Lauren Bee
      August 11, 2015 at 10:10 am

      Some utility companies only offered the option to “average” my monthly costs into a flat monthly rate- meaning in the months when it’s lower I’d pay more, and in the months when it is higher pay less. This wasn’t saving money per se, so I opted not to, but the option to know exactly how much you’re paying is nice. I also got the coupon to lower my ADT (home security bill) from the local paper.

  • Melissa
    August 11, 2015 at 8:54 am

    I actually had no idea you could hack your mortgage payments. For some reason I just thought that was a fixed amount… awesome! You should cover how you did that 😉 I definitely haven’t hacked my budget as well as you did!

    • Lauren Bee
      August 11, 2015 at 10:11 am

      Mine is the mortgage payment plus as escrow account for taxes, waste bill, etc. etc. so I pay just one monthly fee to cover all of those expenses. My yearly escrow costs (taxes + insurance etc.) were actually lower than what they were charging me, so I asked them to lower my rate. Not sure if you can hack, but it is worth doing your homework to see if they may be overcharging you.

  • Ali
    August 10, 2015 at 5:16 pm

    I’ve never thought of this as budget “hacking” but I like that term and it is definitely something I do. I find that I do it a bit more irregularly and informally, mostly with my “wants” expenses (not the needs). For example, if I splurge a bit shopping one month, I’ll adjust my eating out budget to make up the difference.

    • Lauren Bee
      August 11, 2015 at 10:12 am

      That makes sense. I think because we group utilities as “needs” (which they definitely are!) we don’t question if we’re spending appropriately in those categories as much, even though there is money to be saved.

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