How to Downsize Your Life
There are times in life when you may feel like you need a break, need to pare down your lifestyle and make some changes. Other times, due to circumstances we may need to downsize our budgets to make life more manageable. Here is our plan to downsize your lifestyle.
Step One: Evaluate the Budget
Everything in your financial life comes down to the budget. The first step to downsizing is to evaluate the budget, for understanding of the financial situation you are in. Questions you can ask yourself at this stage:
- Is the budget still working properly?
- Are there any holes in the budget?
- Does my budget match my actual spending?
Understanding these factors regarding the budget will guide decisions made from this point forward.
Step Two: Make Cuts
At this point, after understanding the budget, you can look for places to make cuts – specifically, cuts to unnecessary spending. You can pare down the budget spending in areas like:
- Cable/tv bills
- Memberships (gym, food, subscription boxes, etc.)
- Restaurants/Eating out
- Groceries (how much is being spent, what can be cut back)
- Clothing/accessories/personal items
All of these areas are suggestions where change can happen – often when looking at a budget, these are the areas that tend to be most inflated, and can be re-evaluated for savings.
Step Three: Evaluate Larger Cuts
After you have made all the necessary smaller cuts, you can evaluate where larger cuts can be made in the budget. Whether it be from downsizing a home, downsizing some general housing expenses, etc. – this is where you evaluate what is truly necessary in your budget, and where you can save. Typical examples of these are:
- House payment (downsizing to a smaller home)
- Car payments
- Credit card debt
- Student loans
If you are still in debt, you can evaluate what of these areas you can cut back on, or even refinance to obtain a lower payment/interest rate, without extending the term.
So that’s it! There are our methods for making cuts to a budget, whether it be for a personal financial goal to spend less, planning for a family so you can have a stay-at-home parent rather than daycare, or changing jobs, budget changes can happen for the positive.