5 Things You Shouldn’t Eliminate When Trying to Reduce Your Personal Expenses

Photo by Towfiqu Barbhuiya on Unsplash

Many people around the world are experiencing a cost-of-living crisis. This is when the cost of everyday essentials rises faster than household incomes. As a result, things like housing, food, and transportation become harder to afford.

When you realize that you don’t have as much money left over as you used to after covering the essentials, it’s only natural that you should put together a budget and look at ways to cut costs. While many things can be in the firing line, you shouldn’t eliminate the following: 

Insurance  

When you read through insurance FAQs, you’ll learn about the value of home and general insurance, as well as automotive insurance. They can provide much-needed financial protection if your home, business, or vehicle is damaged. 

Knowing their importance, canceling your insurance is the last thing you should do when you’re trying to reduce your personal expenses and stretch your dollar. If you did and something happened to your uninsured property, you would need to cover the costs of repairs out of your own pocket. 

Housing Payments

Whether you rent or own your own home, your mortgage or rent payments are non-negotiable. Stable housing is crucial for your health, well-being, and happiness. However, that’s not to say you can’t reduce those payments if it’s necessary to do so.

If you rent, see if there are more affordable rentals in your preferred location. If you’re a homeowner, you might be able to approach your bank to discuss interest-only payments to get through a rough financial patch. 

Emergency Savings

If you’re in a position to, keep adding money to your emergency savings account. Even when times are tough, having this buffer can offer much-needed peace of mind. An emergency account can come in handy when something unexpected happens, like your car breaks down or an appliance stops working.  Financial planners typically recommend trying to save at least three to six months’ worth of expenses. 

A Working Phone 

You don’t need the latest smartphone, but a working phone that you can use to stay connected to people can be crucial. It’s even better if you have an internet plan with it so you can pay bills and access essential online services. Shop around and research the most basic plans offering the best value for money. 

Debt Payments

While your debts can be out of sight and out of mind, they don’t disappear on their own. They require you to make regular, consistent payments over a set period. Not making those payments can also have disastrous consequences, like being sent to debt collection, ruining your credit score, and having snowballing debt levels.In most cases, the more payments you make on your debt, the less you have to pay in interest. It may not be long until you’ve paid it off and are free from that financial burden. 

Reducing your personal expenses can be crucial when you’re on the brink of living beyond your means. However, these costs above should remain within your budget to ensure housing stability, financial health, and peace of mind.