Clever Commerce

Jun 20

How to reduce your non-essential expenses without losing out

Posted by Deborah Harris at Saturday, June 20, 2015

Part of creating a household budget is working out all of your expenses. Then you simply add them all up, deduct the total from your monthly income and voila—what you have left is the amount of money you’ve saved.

And the less you pay in expenses, the more you save.

Unfortunately, you can’t eliminate expenses completely. No matter how much you want to save, you still need to pay for essential services such as food, accommodation, and electricity. But what about those non-essential services—your phone, your Internet connection, pay TV and so on? Do you really need to pay so much to have them?

While you could cut down on how much you use these services, it isn’t always practical. (And if you have teenagers it may not even be possible.) After all, the reason you got them in the first place is because you use them.

But what you can do is look for someone who can offer the same service (if not better) for a lower rate.

Now this may sound like a statement from Captain Obvious, but it’s amazing how many people will pay a higher rate for the same service for no reason whatsoever.

Well, for no good reason anyway. People often justify it by saying they’re too scared to change, they don't have time to track down lower rates, or the insignificant amount of money they’ll save isn’t worth all the hassle. And then there are those who simply don’t need to save money.

I’m not one of them. And chances are neither are you.

Let’s say you managed to find a deal for one of these non-essential services where you could save $20 a month. Nothing spectacular, right? But if you could do the same for three more services, you’d have an extra $1000 a year to allocate to something else in your budget.

Seems a bit more spectacular now, doesn’t it?

What could you do with an extra $1000? Make a car payment? Pay your car insurance? You probably know exactly what you’d do with that money if you had it right now.

And, if you're like me you're probably thinking of ways to save even more.

Here are two things to keep in mind when trying to save money on non-essential services:

1. While price is obviously the first thing to look at, you should also look at the usage factor. How much service are you getting for the price you’re paying? (If you’re not using a service very much, look for a ‘bare bones’ deal. You can always upgrade if you start using more.)

2. Wherever possible, look for deals that offer unlimited usage.This is particularly relevant for phone and Internet service packages. Not only will you get the best value for money, it will make budgeting a lot easier because it will always be the same amount every month.

Changing service may cost you a little more initially (penalties for breaking the contract, setup fees, etc.), and you may have to put up with a few inconveniences. Just remember what you’ll be getting in the end. Chances are you’ll recoup any extra money you had to spend in the first few months. And after that, you’ll be spending less and saving more every month.

If you’d like to know how to improve the bottom line on your budget, talk to the Personal Financial Management Team at Gill, McKerrow. They’ll help you take control of your finances and achieve your life goals.

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