Trimming Your Budget by Getting Equal Value

Consider two phrases: "You have to cut back on your spending," and "You have to deprive yourself of some things that you want." They sound like they are synonymous, but if you think about it, they aren't. This misconception is often an excuse for people to avoid making tough budgeting decisions about their lives. But you'll find that, with just a little forethought, you can dramatically improve your bottom line without depriving yourself of the things that you love. You just need to focus on getting "equal value."

What is equal value? It's a concept that is simple to understand, but rarely perfectly implemented. As my Great Uncle Sylvester used to say, "You don't have to buy the dog when you can get the bark for free." You just have to find those areas in your life where you can get that bark without paying for that dog. Here's a good example: My wife and I love to go to the movies. We like to go to the movie theater every single week. It's a luxury, sure, and when we looked at the bottom line, we found that it was costing us a huge chunk of money. We were paying nine or ten bucks apiece for our tickets, two dollars for parking, and dropping another sixteen dollars at the concession stand for popcorn, a drink, and candy. In all, the bill for our special night was coming to as much as $38!

We couldn't go on spending $150 a month (which is $1800 a year!) on our trips to the movies. The obvious substitution is to just rent a flick for five dollars or less, but that felt like deprivation to us. We don't just want to see the movie, we want the movie-going experience. So we started making substitutions that didn't detract from the experience. First of all, we signed up for a loyalty program with our theater that meant we could see certain movies and show-times for $5. Since these were during off-peak hours, we no longer had to pay for parking. And rather than go full-bore on the concessions, we started smuggling in our candy and popcorn. That's against the rules, of course, but my justification is that the theater concession prices are just outrageous. Besides, we still buy the drink!

So, we now have an equal value movie theater experience that costs just $15 instead of $38. We're still spending about $700 a year on our habit, but we've saved $1100 from what we used to spend. And we're always looking for new ways to trim that further, too. We don't want to deprive ourselves-- we just don't want to throw money out the window. Apply this concept to some of your luxuries, and you might be surprised at how easy it is to change your bottom line.