Last month, I was able to save $272, and I’m going to let you in on my secret: I prioritized my expenses.

If you find yourself running low on cash every month (or every week) you’re probably wondering how you can cut costs. Prioritizing your expenses is one of the best steps you can take to cut your monthly costs.

Unfortunately, advice like skipping Starbucks or waiting for movies to come to Netflix just doesn’t cut it these days. And budgeting is too time-consuming. Who wants to create a full Excel sheet and list out every single dollar earned and spent? No thanks. I have better ways to spend my time.

If you’re wondering how to actually save money, you’re at the right place.

Prioritizing expenses is essential to saving money because it allows you to determine which expenses you need to cut, and which you need to keep.

To find out where you’re spending your money, you could consider a budgeting app. That’s an easy way to track what you’re spending in a month, and where.

Of course, there are certain costs you can’t cut entirely. You still need to pay for the roof over your head, and you still need to eat food. It’s important to organize what expenses you need to keep, and which you can cut.

Ultimately, it’s up to you to decide what is a necessity, and what isn’t, but you can use my lovely guide to help you decide.

Identify your necessary costs

Identify your necessary costs

First, I determined what I need to live. Food, water, and shelter. Bills for groceries, utilities, and rent are a top priority.

Then, I determined what I need in order to go to work and have a reliable income. I need reliable transportation and childcare. These necessary costs might include bus fare, gas, car payments, or daycare.

The next step is determining what I’m legally required to pay. For example, during tax time, I’m required to pay taxes if I owe. Some parents are legally required to pay child support. Skipping these costs can lead to fines or even jail time.

All the costs on this list are essential. I likely can’t change them unless I’m willing to downsize my home or sell my car. Those may be options if I’m really in a crunch, but at this point, I’m looking to save a few hundred dollars a month, not thousands.

Identify your important costs

Identify your important costs

Next on the list is determining which costs are important, but not life-altering.

Debt is a good place to start. I don’t want to be stuck paying these loans for the rest of my life. If I want to save money on interest rates, I need to work on paying off these accounts.

I identified my debts and found that I have a student loan, credit card debt, a car loan, and a mortgage. Right now, my debts are pretty in check. My credit card accounts are balanced, and I haven’t had issues with making on-time payments on the other loans.

I know that if I needed help, I could consolidate my loans. Oftentimes, financial institutions are open to helping customers consolidate their loans into one account. That usually means that you’d have one bill a month to pay, instead of several, and a slightly lower interest rate than before.

The other important expense you should have every month: saving money. Yes, paying money to your bank account is important. Maybe not as important as paying your rent, but it’s still essential to keeping good financial health.

Every paycheck set aside a certain amount and deposit it into your savings account. Even if it’s just a few dollars a month, it adds up. Over time, you may notice that you start to feel better. It may be a feeling of pride in yourself, or it may be a decrease in financial stress as you build a cushion. Either way, it’s a good thing.

Identify Your Wants

Identify Your Wants

These are the rest of your costs. Everything from streaming services to take-out.

It’s the group with the most flexibility too. Now that your needs are taken care of, you can decide how to split up the rest of your funds. I went through the things I typically buy in a month and crossed off the items I could live without. I only kept the items I felt I couldn’t live without. Here’s my list. What does yours look like?

  • Netflix $9: Want it
  • Spotify & Hulu $13: I got rid of Spotify Premium and downgraded Hulu to have ads. I can live with ads if it means saving $84 a year.
    Now I spend $6/month on Hulu.
  • Adobe $20: Want it
  • Coffee/breakfast $70: I love my trips to Starbucks, but I don’t like what it does to my wallet or diet. Instead of going several times a week, I’ll only go on Mondays and Wednesdays. Hey, I deserve it.
    Now I spend about $35/month on coffee and breakfast.
  • Restaurants $315: I usually go out or get takeout about three times a week. If I just cut one of those trips, and actually eat leftovers instead, I can cut some of that cost.
    Now I’m spending about $210/month on dining out
  • Entertainment $100: Want it
  • Travel $150: Want it
  • Clothes $200:On weekends, I’m usually at the mall. I enjoy shopping, but finding great deals is my true passion. I recently remembered how much I love stores like GoodWill and started shopping there again. I was able to find an Ann Taylor suit for $20! Shopping at thrift stores takes more time, but I find better deals.
    My clothes budget is down to $75/month.
  • Home & décor $120: Want it

All in all, I was able to save $272 in a month!

I don’t always like traditional budgeting because it seems so strict. Every dollar coming in has to equal every dollar going out. But I can write out a list and cross out or downsize the items I don’t need. Once I cancel that subscription or set a plan to only eat out on Wednesdays and Fridays, I don’t have to do anything past that. I can set it and forget it. That’s essential to my financial success.

Sometimes it’s okay to treat yourself, and doing so is actually good for your mental health. Cutting costs doesn’t necessarily mean cutting all wants.

Treat yourself right but be kind to your wallet. That’s the key to spending less and saving money in an ultimate way.

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Ariana Smith is an enthusiastic fashion blogger and freelancer content writer. She loves to write and share knowledge of the latest fashion trends, fashion, and shopping tips and tricks. She is the chief editor at FollowTheFashion.

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