Things that just aren’t worth cutting even if money is tight

If you trim too much from your budget, you’ll get grumpy, especially if you start cutting things that were making you happy.

Here’s a balanced approach to budget trimming that should actually make you happier and leave your wallet more full. There is just one guiding principle as you work through this process; ask yourself: “Is this adding value to my life?” Value comes in different shapes and sizes, from personal to financial well-being, and it will evolve as your life changes.

Big-budget categories almost always have the biggest opportunities for savings

Housing, transportation and food. Those are the biggest expenses for households in Canada.

This is your cue to dig in deep with the spending that’s happening in each area, and begin to ask “is this adding value to my life?”

For housing, it’s probably not worth it to delay much-needed maintenance; that’s a surefire way to make matters worse. Instead, you could focus on essential fixes only. You could also negotiate better insurance rates and delay nice-to-have home improvements until a better time. DIY’ing things you may have outsourced before now is a great way to save, and consider renting out space you’re not using. Bundle your phone, internet and cable services. In some extreme cases, moving to a more affordable space could be the right long-term solution, but this one should be reviewed carefully with your financial planner.

For transportation, it’s probably not worth it to swap your regular car for an electric vehicle; the payback economics on an EV are years long. Instead, try a few smaller money-saving moves such as planning your routes better, switching to one car, or cycling to work.

For food, it’s probably not worth eliminating all takeout and coffee. Keep a weekly affordable food “treat” in your budget and scale back on everything else. For example, making nearly all meals and coffees at home could add between $100 to $300 per month back into your wallet. If you’re having heart pains thinking of giving up your daily latte or weekly shawarma, save up and buy a better espresso maker and the spices you need to make the foods you love. Near-complete elimination of food waste is said to add $140 per month back to the budgets of Canadian families right now. The trick to implementing this is meal planning and shopping-list making.

If you’re really using it, keep it, but make it a better deal

The key for smaller costs you plan to keep because they add value to your life is to see if you can get the cost reduced and to make sure there isn’t any overlap with other similar expenses and activities. For example, if you use a learning app for your child to help with phonics, and it’s working great, quickly scan to see if this is the lowest-cost, greatest-value option for your money. If you’ve subscribed to three or four of the same kinds of apps, have a tutor and are also taking them to a library program, that’s a sign you’re overdoing it, and should reduce. You’ll save money and probably be less tired. I often see similar examples with overlapping streaming services for music and shows, fitness memberships, various learning programs and more. Keep only your favourites, negotiate for better deals on those, and trim the rest.

Another evaluation technique to see what you’re really getting value from is to take the monthly cost of whatever the product or service is, divide it by the number of times you’re using it, and you’ll get the true cost per use. If the cost per use is ridiculously high, it’s a telltale sign that you’re probably not getting great value from it.

Annoying high banking and credit card fees also fall into this category. My advice is to see about getting low-to-no-fee financial products that have rewards you actually use, like for groceries or travel. Whatever you do, don’t cancel your life, critical illness and disability insurance. You need this coverage in the event the worst-case scenario happens to you and your family. Instead, have a full review with your broker to ensure you still have the right coverage.

It’s probably not worth cutting your therapist or what’s keeping you happy

That said, it might not be the right time to start an expensive new habit or program. Your personal well-being is of utmost importance. As you inventory what it takes for you to feel well, you will get a sense of what’s essential to your happiness and health. The idea is that these core well-being costs take priority over any kind of non-essential spending on new picnic sets or another pair of running shoes. Overspending on things you don’t need will actually make you feel unwell and unhappy. These purchases do not add value to your life. If you’re an overspender or compulsive buyer, try inserting a powerful 48-hour pause between any purchases you’re about to make. It’s often enough time to realize you don’t need it.