Smart strategies for minimizing expenses

The inflationary environment of recent years has many seeking new ways to streamline their finances and reduce expenses.

A strategic, holistic approach to spending can help maximize your savings and investment opportunities — without compromising your lifestyle. Your Ameriprise financial advisor can provide guidance on balancing expenses, income and savings to help you reach your long-term financial goals.

Track your expenses and create a budget

Tracking and understanding your spending is foundational to identifying opportunities to lower expenses. You can do this by reviewing your bank and credit card statements (or using an app to view your expenses) and then creating a budget to put guardrails around your spending.

Learn more: Personal budgeting strategies to help reach your goals

Align lifestyle spending to your values

Lifestyle expenses are items and services that you want but don’t need. As you track these expenses, identify what’s most important to you. Keep those expenses that you value, but rein in those you don’t.

For example, maybe you highly value the convenience and community of buying coffee at your local café. On the other hand, perhaps you don’t use your gym membership much because you prefer to exercise at home. Being mindful about these preferences, values and habits can help you find ways to save.

Here are opportunities to consider:

• Scrutinize subscriptions and memberships. Are you getting the most from your gym membership, streaming services, cable TV, magazine subscriptions or other items that are automatically billed each month? If not, consider canceling or temporarily pausing them. If you find yourself missing them, you can always resume them later.  
• Dine in more often. Dining out adds up quickly. Reducing your restaurant expenditures can be an effective way to ease spending.
• Find ways to do what you love — for less. As you identify what discretionary spending you value most, consider how to fund those things for less. For example, smart travel strategies — such as vacationing in the off-season or driving instead of flying to your destination — can help you experience new places and cultures for less. Or if you prioritize eating out, explore less expensive restaurants.
• Delay non-urgent purchases. For example, maybe you want but don’t need a new car, but due to other pressing goals, it may be worth waiting.

Audit essential fixed expenses to find hidden savings

Fixed essential expenses are necessary expenses, such as a mortgage, that cost the same amount each month. However, in some cases, fixed expenses may fluctuate. A little research could reveal savings opportunities.

Here are opportunities to consider:

• Negotiate better insurance rates. Contact your health, auto and homeowners’ insurance providers to find discounts or adjust your policies to better meet your needs. Over the years, your insurance rates can rise significantly. It may be time to shop around and switch carriers to get a better deal.
• Check for fees on unused services. Analyze your phone, internet and cable TV bills to see if you're getting services you don't need. If so, contact your service provider to have them removed.
• Review your bills for payment errors. If you're not watching your expenses every month, mistakes can easily happen. For example, look for double billing oversights, instances of overpayment or incorrectly timed recurring payments that are causing late fees.

Keep essential variable expenses in check

Essential variable expenses are those necessary goods and services that can change month to month.  For example, groceries, transportation and utilities can fluctuate widely depending on external economic dynamics. Where possible, it’s wise to keep this spending in check.

Here are opportunities to consider:

• Comparison shop: Whether purchasing groceries or gas, it’s smart to continually shop around for the most competitive prices.
• Conduct preventive maintenance: Keeping your heating and cooling systems in optimal condition can help reduce utility bills. Likewise, regular automobile maintenance can help avoid costly surprise repairs or replacements.
• Realize savings with annual billing cycles: Some subscription services, insurers and other providers offer a discount to customers who pay for their services in a lump sum annually versus a monthly billing cycle. However, this lower cost does come with a tradeoff: Customers are typically locked into a 12-month contract if they opt for the yearly payment, meaning there generally is limited flexibility to cancel these services before the subscription term ends.

Minimize expenses to maximize savings

Your Ameriprise financial advisor can help you identify potential opportunities in your budget to save more toward your financial goals.