For many people, the days of having a steady source of income are over. Your income may fluctuate month to month, and sometimes you may change your living situation; either way, there are times when you need to adjust your day-to-day or month-to-month budget. Here are some tips on how to plan and stay in control of your budget to minimize recurring expenses.
There are multiple types of recurring expenses. Some include various insurance types that can be adjusted. Some include payments that can be completely canceled. And some are necessary to keep, like utility bills, but can be adjusted in different ways. We’ll cover all three categories of expenses.
Avoiding Long-Term Insurance Financial Drains
#1 – Auto Insurance
Monthly vehicle insurance payments can be a big financial obligation. One very strategic way to lower your monthly costs is to sign up for 12 months instead of six months. This allows you to pay less per month because the insurance company views you as locked in.
So if you know in advance, say, that your income will vary, this can be a great way to plan for harder months.
#2 – Homeowners Insurance
There are many feasible discounts you can find for homeowners insurance. For example, you can cut your premiums by as much as 20% if you improve home security. This can entail installing sprinkler systems, fire alarms, and burglar alarms. You can also make your house more disaster resistant.
These solutions are more long-term to avoid financial drain and can be somewhat expensive at first. However, other recurring expenses, covered below, can be more instantly reduced.
#3 – Life Insurance
Now might be just the right time to plan out life insurance and retirement plans. In the case of life insurance, the longer term your policy is, the more expensive your premium will be. Consider changing to a policy that just focuses on when your children are young and financially dependent.
You can also improve your health to reduce premiums. Try quitting smoking and making sure you stay at a healthy weight.
#4 – Health Insurance
Thoroughly research health insurance, and look for plans that have higher deductibles and are HMO plans. These options will lower your month-to-month expenses by lowering your premiums.
HMO plans do not allow you to see doctors you want without a referral, but this is the trade-off. And a higher deductible also means if you suddenly get injured or seriously ill, you may have to pay more. But again this is the trade-off to lower month-to-month costs.
Common Financial Drains That Can Be Completely Cut Out
When examining for instant day-to-day control over your budget, you may find you have more extraneous recurring expenses than you realized. And these can add up. Fortunately, they can also be completely cut out, providing instant relief.
If you have club memberships, you may need to temporarily cancel them. The same applies to gym memberships. Note, however, that you can still jog in your neighborhood if need be. Or if you live near a lake or beach, swimming may still be an option.
Other recurring financial drains to check for include subscriptions like Apple Music or Spotify. Perhaps you subscribe to a blog, a newsletter, or a podcast. Or maybe you use services similar to Netflix.
Go through your card statement to keep track of what you are subscribing to since it can be hard to remember. And beware of free trials. You may find in your card statements that you are paying for a service you don’t even want or use.
Also consider switching entirely to internet usage, rather than paying for cable TV. Much of the content overlaps, and an entire bill vanishes.
Lastly, some people have remote storage of physical items that they pay for monthly. See if you can find places for these items temporarily; family or friends may be willing to help.
These options provide great immediate relief for long-term financial drains.
Adjusting Other Common, Necessary Financial Obligations
Aside from insurance, there are many other necessary bills that can be reduced, though not cut out entirely.
Tips for reducing utilities include: taking shorter showers, purchasing energy-efficient appliances, adjusting your freezer and fridge temperatures, adjusting your thermostat when you’re not home, and using LED light bulbs.
You can also opt to average your bill. For example, if your summer months are when you know your income will be in a tough spot, air conditioning could be an issue. So choose to average your costs and pay more during the winter months to cover your summer costs.
For reducing rent or mortgage, Airbnb can be a great way to reduce your costs. Consider renting out a room temporarily, after thoroughly checking the tenant, of course. This can contribute to helping you pay your rent or mortgage. And yes, Airbnb is available to renters, too.
For phone bills, see if you can change your data plan and use less data. And lastly, for credit card bills, check the terms and find out the minimum payment.
Dorothea Hudson researches and writes for the car insurance site, CarInsuranceComparison.com. She is passionate about helping her readers budget and save.