• Baylee

3 Major Items I Cut From My Budget - and Don't Miss

Have you ever randomly gone over your bank statements and been SHOCKED at some of the things you've spent a lot of money on? Or started a budget and debated whether to include a category that you didn't really appreciate but KNEW took up a lot of your spending?

I've been there. Towards the end of 2020, I had 3 major expenses that I dreaded seeing on my statements. They felt like my "downfall" purchases. The little things that reminded me that my spending wasn't really aligned to my values.

That might sound a little dramatic, but it's true. Most people have something they consistently spend money on and regret. Usually, those are the line items that we regret for other reasons, but putting a dollar value on them makes us regret them even more.

After years of struggling with these purchases, I finally figured out how to effectively cut them out altogether, or significantly reduce them.

Keep reading to find out how!

Two kinds of spending

First, there are two different kinds of spending: mandatory and discretionary.

Mandatory spending is made up of fixed bills that you more or less have to pay. This might include rent, health insurance, taxes, utilities, auto insurance, some groceries, car repairs and loan payments. If you don’t have enough money at the beginning of the month for your mandatory spending, you will suffer long-term consequences. You might go hungry, your credit score might tank, or you might even be evicted.

Discretionary spending, on the other hand, is made up of variable spending. It’s not fixed and will often change drastically depending on your mood. This might include entertainment, eating out, vacations/travel, home décor, clothes, some groceries (if you like to splurge), etc. If you don’t have enough money for discretionary spending, you will most likely feel unhappy- but the consequences will be short-lived. You’ll wish you could buy that book to read, feel like you missed out on your chance at a Summer vacation, or really (really) crave Chinese takeout. But you know that your life won’t end as you know it.

This post is about how to cut back on discretionary spending.

Part of the reason why people feel so frustrated thinking about their spending is because they’ve been told over and over and over again that they need to reign it in, without regard to whether it would be best to reign in mandatory or discretionary spending.

Whenever I talk to a client who wants to cut back on their spending, I'm always careful to help them determine whether the spending is mandatory or discretionary. Because in my experience, changing mandatory spending depends on changing your systems, whereas changing discretionary systems depends on changing your mindset.

How to cut down on discretionary spending

It took me FOREVER to realize this, but there's actually a trick to cutting down on discretionary spending.

Write down why you don't like spending money on those things for reasons other than money.

The categories I cut back drastically on- and why.

After a lot of self-reflection, I realized that the three categories I hated spending money on actually had very little to do with my budget. I disliked them for seemingly unrelated reasons!

And once I put the focus on cutting back on THOSE reasons, the money followed.

These are the categories I was spending a LOT on and cut back on successfully- and how.

#1. Eating out

I used to spend way more money than I care to admit on eating out and takeout meals. Not only would I pay for myself, but since my partner was on a more strict budget than I was, I would pay for his food as well in the hopes that he wouldn't call me out!

I justified this in my head by thinking that since I lived in an amazing city I HAD to try all of the food! It might sound like a great excuse, but it doesn't hold water when you stop at the same poke place once a week on your way home from work.

I realized that I was ashamed of eating out so often for a much bigger reason: I felt like I never really learned how to prepare food for myself at home. In my mind, "good" or "healthy" food only came from a restaurant! And I knew that that mindset was weighing on more than my wallet. It made me feel inadequate. And I hated feeling like I had to rely on others for such a basic necessity.

So towards the end of 2020 I started to practice meal-planning and making healthy meals for me and my partner at home.

Once the shift was made in my mind from "I have to cut back on this" to "I want to cut back on this," that made all of the difference.

#2. Drinking alcohol

I've noticed that alcohol can be a bit of a tricky subject to talk about. For one thing, whenever I mention cutting back on alcohol, the next question is invariably some version of, "Did you have a drinking problem?"

So no, by anyone's definition outside of the strictest churches I certainly didn't have a problem.

But the truth is that alcohol is an addictive, expensive substance. Even for those who aren't anywhere near "problem" status, alcohol generally results in feeling less than great the next day. Personally, even though I only drank once or twice a week, I disliked alcohol for how it made me feel (frankly-like shit), I was worried about the long-term consequences on my health, and I resented that it held me back from some of my goals. After all, why work on my business if I can just have a glass of wine and watch TV tonight?

I had to ask myself: Why in the world am I spending so much money on something that I don't even enjoy?!

So I just stopped buying it. And whenever I thought of picking some up at the grocery store I specifically didn't focus on the money, I focused on everything else.

Do I really want to feel hungover tomorrow?

Remember that story I read about someone suffering from cirrhosis?

I just got my skin looking nice again, no thank you.

Really, when it comes to cutting out alcohol, saving money is a nice bonus rather than a primary motivation. But hey, I did save a lot of money too!

#3. To-go coffees

I’ve been addicted to coffee since I was a teenager. In fact, when I was a baby I had infant asthma and my bottle would often be filled with half milk and half coffee because some doctors at the time (or at least MY doctor at the time) believed that the caffeine helped. And when I worked at Starbucks in college I often had up to 12 shots of espresso a day (do not recommend!)

When I switched from working as a barista to working a bank job, I still picked up a latte every day on my way to work. At first, I was commuting 3 hours a day and thought, “This is such a small price to pay to start my day off a little happier.” But before I knew it, it had been 2 years, and the idea of a hot to-go latte in the morning had lost its glow. I was just as happy bringing a coffee from home, I just never bothered to build up the habit.

Once the shift was made in my mind from "I have to cut back on this" to "I want to cut back on this," that made all of the difference.

I'm sure this will come as a surprise to many, but the addiction bothered me the least. The money it cost bothered me a little. But what bothered me the MOST, when I really thought about it, was the carbon footprint I was leaving in my wake. Not only was I commuting up to three hours a day, but I was also using single-use plastics every day. That bothered me!

Once again, I noticed that once I focused on the REAL reasons for why I didn't want to spend money on something, I naturally spent less.

Change your mindset- change your spending

I successfully limited these expenses within a month of realizing how they were holding me back, and I did so with mindset work. Instead of just trying to tell myself not to buy these things, I consistently told myself I wasn’t the kind of person who did certain things. I made it a part of my identity.

  • I’m not the kind of person who fills landfills with old coffee cups just because I’m too lazy to make one at home.

  • I'm not the kind of person who trades feeling genuinely good tomorrow for feeling a mediocre buzz tonight.

  • I’m not the kind of person who sacrifices precious time making food with family just for the sake of convenience.

None of those people are people I want to be in 5 or 10 years, so I tried to change my identity around them now. And for the most part, it worked! Of course, there are some months where I'm not paying as much attention to what I'm consuming and I go back to my old habits. But for every week or month that I live and spend intentionally, I solidify my identity a little bit more.

James Clear said it best:

“Every action you take is a vote for the type of person you wish to become. No single instance will transform your beliefs, but as the votes build up, so does the evidence of your new identity.” James Clear, Atomic Habits


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