Budgeting 101 says that you should break your budget down by income and expenses. The next step is to get specific with the type of income you bring in and the type of expenses you have on a consistent basis. When you get into the nitty gritty of where your spending happens, you can assess what expenses can stay or go. Certain spending takes priority over others. That means certain budget categories may not be as important as you think.

budget categories

Before you can identify what spending areas are more important than others, you have know where all your money goes. The Budget Category Checklist will help guide you through common spending areas, so nothing gets left out of your budget. Once you’ve identified your budget categories, you can start assessing their importance. I’m sharing 10 common budget categories that most people can live without. This will help guide you through any cut backs you can potentially make.

Start with Discretionary Areas

When I am creating budget plans for clients, I always assess discretionary spending. Since discretionary spending is often what we want, and not what we need, it’s the easiest to get rid of (on paper, at least). If you are trying to save for a specific goal, or get your spending in check, discretionary spending should be the first to go. I’m not saying cut this type of spending out completely, but it’s not helping you much in the long run. Here are a few examples:

#1 Dining Out

We have all been there. It’s not easy to pass up a nice happy hour with your co-workers, or back-to-back birthday dinners with friends. While dining out can certainly be budgeted for in moderation, it can easily add up if you aren’t mindful. One lavish dinner and drinks can throw your budget down the drain. The best way to control your dining out spending, is to use cash. Whatever amount you have budgeted for dining out, take that amount of cash out and use it only for going out to eat or drink. Once the cash is gone, you will need to wait until your next payday.

#2 Work Lunches and Snacks

Maybe going out to dinners and bars isn’t much of any issue, but what about picking up lunch at work? If you work for a large company, it’s likely you have some form of cafeteria at your place of work. It can be tempting to throw the sandwich you packed in the trash and go get a fresh meal. Resist the temptation. The same thought can go for vending machine snacks. A dollar here and a dollar there seems harmless but can quickly add up.

#3 Manicures and Pedicures

What woman doesn’t love getting her nails and toes done?! Everyone enjoys it, but the key is moderation. Salon visits aren’t always cheap, so the more you go, the more you spend. Manicures and pedicures can eat away at your discretionary budget limits. If you can’t manage it all, minimize the salon visits.

#4 Subscription Boxes

Unless subscription boxes take the place of another budget category (beauty boxes for make-up, fitness boxes for gym), then they may be unnecessary expenses. It’s always exciting when you get your box of goodies every month, but how often do you use what you get? Most of the time, the samples are just small enough to get a few uses and nothing more.

#5 Shopping Trips

Unless you are in need of a particular item, shopping trips can throw a well-prepared budget down the drain, and even cause more credit card debt. If you are an avid spender, what I’m saying probably resonates with you. You can go into the mall for one particular thing and come out with 5 other things. If you have $200 to spend, you can certainly spend it all. Shopping trips should be avoided when you can’t control your spending. If you need a particular item, buy it online. It’s still risky, but you can talk yourself off the ledge, without a salesperson breathing down your neck!

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#6 Going Out with Friends

Humans need social interaction, and there’s absolutely nothing wrong with that. However, going out 3, 4, 5 nights a week can drain your body and your bank account. If you want to have that social interaction with your friends, do your due diligence. Research free and cost-effective events and activities in your area. I guarantee you will find things to do that don’t break the budget.

Some Living Expenses Can Go

While it’s easy to spot the discretionary spending areas (simply ask “is this something I need or want?”), it’s not always easy to spot the actual living expenses that may be able to be downsized or cut out completely. You have to really think through your past spending on these items and be honest about how much you need them. It’s easy to convince yourself you need something, when you really don’t. Here are a few examples:

#7 Cable That’s Bundled with Phone/Internet

I’ve heard this before: “Well, if I get rid of cable, then my phone and internet is going to be the exact same price, so I may as well keep the bundle.” What an excuse! While it may be true in some sense (because that’s what the salesperson told you), there are other alternatives. You can switch companies altogether. You can threaten to cancel your services if they aren’t willing to work with you. You can take action instead of succumbing to what the cable company is telling you.

#8 Cell Phone Data Plan

Notice that I said “cell phone data plan” and not “cell phone”? We all need cell phones, I can’t imagine life without mine. However, we don’t all need the most expensive plan. There are so many free talk and text options, so if you are paying for minutes, do your research. Where cell phone bills can get costly is in the data. Take a look at your last 3 or 4 bills. Did you use all the data you are paying for? Did you go over your allotment and have to pay a fee? Educate yourself so you can make moves to get back in budget.

#9 Collision Coverage for Your Car

Insurance professionals state that if your car is less than 10 times the premium, the coverage you have isn’t cost effective. Consider dropping your coverage terms. You may not need comprehensive or collision coverage on a car that isn’t worth much. The insurance alone will exceed the value of the car after a few years. Check out the value of your car at Kelley’s Blue Book and review your coverage accordingly.

#10 Excessive Grocery Shopping

Do you find yourself throwing out food because you didn’t make it? Fresh produce is perishable, so you need to plan before you buy. Instead of buying ingredients you think will work, buy ingredients for recipes you will be making in the week ahead. You could be throwing your hard-earned money away by buying foods you don’t plan to eat.

 

There are certainly more than 10 areas your budget can do without, you just have to find them. Every person’s situation is different, so put in the effort to pinpoint where you can cut back and make moves! Are there certain areas in your budget that you have cut back recently? What are some of your vices? Share your tips and cut back tricks by posting a comment below!

-Raya
The CGS Team

Raya ReavesFounder; Financial Consultant