Weekly lottery tickets, morning lattes, after-work drinks -- we've all thrown our money away on small luxuries, then wonder at the end of the month where on earth it all went. Cutting out small items like your daily coffee can have a small but tangible impact on our ability to save more money, but what about the intangible costs that we don't even realize we're forking money over for?

Things like credit card interest, bank fees and automatic subscription renewals can add up and most of the time, we don't even realize how much of our income is supporting these costs. These kinds of costs can really hinder our ability to reach our financial goals.



"Avoid putting anything on department store credit cards. High interest consumer debt is absolutely the worst debt you can accumulate," stresses Kelley Keehn, personal finance expert and author.

For instance, if you buy something because it's 15 per cent off and put it on your department store credit card, you're defeating the benefit of the sale if you're paying 29 per cent interest on the credit card, she says.



Keehn makes clear to her readers that controlling spending is all about awareness, not strict, inflexible budgeting. "I often compare financial health with physical health," says Keehn. "The first thing someone does when they want to drop some pounds or maintain their weight is to count their caloric intake.  I ask my readers to count their financial calories and see where they can get creative in trimming the fat long-term, while having still fun."



Keehn devised five simple experiments to help cut monthly costs and help you reach your financial goals. Focusing on awareness and self-control, these experiments are easy ways to track your spending habits and see exactly where your money goes each month. Try a few to see what works for you and hopefully these experiments will carry over as long-term financial habits.



5 ways to cut your monthly expenses and reach your financial goals



1. Create an anti-budget

"I don't believe in traditional budgets as they simply don't work -- change must be fundamental and systemic for us to achieve long-term success," says Keehn. "My solution is what I call my 30-Day Anti-Budget.  The rules are simple.  Every six months or at least once a year, I ask my readers to simply account for every single dollar they spend in a 30-day period.  Not to do anything different, just write down every dollar spent."

Keehn says that the purpose of this is to make people more aware of how much they spend, especially when they tally the costs and separate them into categories. 


Page 1 of 2 -- Find out how paying only with cash for a week can help cut your monthly expenses on page 2
2. Have your friends hold you accountable

Making a promise to cut back is one thing, but making a statement about it to friends and family can put more pressure on you to live up to that promise.

Keehn recommends using Stickk, a website where you can set goals and invite friends to help you track your progress.



3. Pay only with cash for a week

Take out a specific sum of money for the week and only make purchases paid for with cash -- not on a credit card.

"Paying with cash accesses a different part of our brain associated with loss aversion," explains Keehn. "When dollars are leaving our wallet, we feel the loss and it makes us much more aware of our purchase. When we simply swipe or punch in numbers with our debit or credit card, we don't feel that same loss as it's too intangible."



4. Send yourself immediate reminders of your purchases

E-mail or text yourself any time you buy anything anywhere. Do this for one week, then take a break and start again for another week. The accountability and awareness can curtail needless spending and hopefully, after a while, will become second nature.



5. Have a cooling off period after big purchases

If you're going to make a big purchase, Keehn advises that you follow it with a cooling off period for spending. For example, if you spend $100 on a shirt that you didn't budget for, consider a 24-hour no-spend period or whatever amount of time you think is feasible and will make an impact.



Whether you think you can tackle all five of these financial experiments or just one or two, the main thing to remember is that small adjustments to your spending habits can have a big impact on your ability to achieve your financial goals. What have you got to lose … other than that debt hanging over your head?

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