How to Apply Scissors to Your Budget

by Tim on March 14, 2011

If you’ve already set a budget, kudos to you!  You’re already ahead of the game.  The real challenge comes with keeping it and knowing which areas you should give some flexibility to and which ones are non-negotiable.

My wife and I try to stick to our budget as closely as possible.  When we decided to plan for a vacation this summer, we realized that our savings for the vacation was a bit weak and that our budget had little room for adjustments.  Our strategy was to use extra income and our tax return to cover the remaining $900 of the trip.  Fortunately, we were able to slide by without compromising our budget, but this process made me think about how I would adjust our monthly spending if we hadn’t come across the extra income.

Here’s What We Would Cut From The Budget

We’ve trimmed our budget down pretty well, but there is still room in case we need to cut back  in some areas.  We’ve done it before, so I know it’s possible to cut the following:

Entertainment – Currently we spend about $50 a month on entertainment which includes movies, eating out, sporting events, or other activities.  This would be the first to get cut because we could improvise and watch movies online or play board games for a couple of months.

Groceries – At about $275 each month, this would be a tough area to cut, but we could if we absolutely needed a few extra dollars.  Granted, it wouldn’t be much more than $25 — and that would be tough — but it could be done.

Cell Phone Plan – We have a $10 texting plan for each of our phones that we could cut back for a month if things were tight.

Fuel (Second Car) – Having two cars means spending twice as much on gas.  With a few sacrifices, I know we could make one car work for a little while.  It wouldn’t be a huge savings, but we might save $25-$50 a month in gas costs – a cost we’re OK with paying because of the difficulty it would be in sharing a car.

Here’s What We Would NOT Cut From The Budget

Giving – We believe in tithing a portion of our income and that means we give whether we are making $1,000,000 a year or $10,000.  This is something I wouldn’t cut from the budget and would encourage you to keep it as well.

Insurance – I’m all about lowering payments on insurance policies if you’re able to get better rates, but dropping the insurance isn’t something I would cut.  The risks of not having health, car, home, or life insurance is something I don’t want to live with.

Long term savings (retirement) – I think saving for the future is a habit that needs to be shaped and strengthened over time.  This means saving even when times are tough.  Now, the amount might vary slightly, but I don’t like the idea of not saving anything for retirement.

At the end of the day, it comes down to what you think is a priority.  No on likes to be forced to go without, but if you’re able to make small changes as needed, it’ll help make your budget even more effective.

What are some areas that you’d recommend cutting?  What are some areas that you wouldn’t think about cutting?

Tim is a personal finance writer at Faith and Finance a Christian financial help blog that provides financial insights for individuals, businesses, and churches. Outside of finance, Tim enjoys spending time with his wife, playing the saxophone, reading economics books, and a good game of RISK or Catan. Find him on Twitter and Facebook and subscribe to the Faith and Finance RSS feed.


{ 7 comments… read them below or add one }

krantcents March 14, 2011 at 1:45 pm

This may be obvious, I would try to change the vacation! Rather than cutting it, alter or change it so you can reduce the costs. There does not appear to be significant dollars elsewhere.


Tim @ Faith and Finance March 14, 2011 at 7:40 pm

You make a good point krantcents – if we didn’t have the funds from the tax return, a change in plans would have been necessary. We could still have a nice vacation for $500 or less if we drove somewhere and stayed at a reasonably priced hotel.


First Gen American March 15, 2011 at 12:23 pm

I’d probably try to sell some stuff on ebay or craigslist. I always have a pile that needs thinning, here there and everywhere.


rdubuk March 15, 2011 at 2:45 pm

NO way these numbers are real. A monthly budget of 275 for food? and 50 for entertainment? I don’t believe it for a minute, maybe in a fantasy land. I’m sorry, but for my family of my wife and a small child, the food budget is almost 1000.00 for the month. Eating out is close to 300.00. These are real numbers, not fudged. I have been budgeting for several years. 275.00 would maybe last about 2 weeks, no more.

Some low hanging fruit to cut is:
Cable. Hook up a computer to your TV, watch endless hours of streaming content on the web.
Speaking of web. Downgrade. who really needs 30mbps download speeds? 6Mbps is sufficient. play the cable company and the dsl companies off each other to bargain the best rate.
Phone: cut the land line… If you really need it, get vonage or magic jack.
Insurance: keep the coverages that you are comfortable with, raise your deductible, keep the deductible in your emergency fund.
Cars: if you can, get rid of the second car. If you owe money on a car, sell it, buy one outright, no payments.
debt: Only put away the bare minimum into savings/401ks, etc.. until the debt is paid off. (paying finance charges is the single biggest waste of money)

anyways… goodluck.


Tim @ Faith and Finance March 15, 2011 at 4:39 pm

Great suggestions rdubuk!

I’ll actually stand behind those numbers 100%. (happy to email a screenshot of my budget too 🙂 )

$275 for groceries is small, but we make it work. Sure, there are times we spend $30 or more on extra things if we’re hosting a party one month, but we generally make it work just fine.


rdubuk March 15, 2011 at 5:52 pm

Makes sense if you use Mint. Mint budgeting is way off. Mint, Quicken, etc, tells you were your money was spent. No planning for your money whatsoever. I don’t care where my money has been, I want to know beforehand where it is going. For this, I use YNAB. Mint, Quicken have a long history of mis-categorizing stuff. I don’t trust any of the auto downloaded information. I trust entering each transaction into a register myself. Sounds tedious, but it is very very accurate.


Tim @ Faith and Finance March 15, 2011 at 6:36 pm

You’re right, does occasionally put something in the wrong category, and with most of our food purchase being from Walmart, we manually enter in the food items after each week of shopping. We’ve been using mint for two years now and have a good idea where our money is going, but YNAB sounds like a great tool to help give your money a ‘home’ before it’s spent.


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