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Easy Money Management Strategy to Slash Your Monthly Bills


Here you will learn how to implement a new money management strategy and cut your monthly spending by up to 20%.

Your money never seems to stretch far enough, does it? You need to cut your monthly bills but want to avoid the pain of strict budgeting.

I know the feeling.

There was a time when the month seemed to outlast our monthly income by an eternity. It’s during this period that we accumulated debt.

I paid little attention to my payslips or my bank balance, and I had no idea what things cost.

You would be justified to think that’s irresponsible or even foolish.

Perhaps. But more than anything else, it was fear.

When I finally mustered up the courage to look, we were in so much debt that fear became irrelevant: it was either do something about it or end up in bankruptcy court.

I was only grateful that debtor’s prisons no longer exist; otherwise, my son would have been growing up like Little Dorrit.

So, I decided to act.

I read. Studied. Analysed. Crunched numbers.

I applied my knowledge of chess (despite having forgotten much about the game) to experiment with money management strategies. More importantly, I implemented these strategies.

As I’ve mentioned previously, we managed to make our money stretch further (and paid off all our debt in three years) by doing two things:

  1. We cut our monthly bills by managing our money better; and
  2. We increased the amount of money we had to manage.

Today, I’ll tell you about how we achieved the first point.

Let Me Show You How We Cut Our Monthly Bills by 20% by Using the ERR Money Management Strategy.

What is the ERR Money Management Strategy?

I developed and used this strategy to get out of debt.

I still use it, like a gospel, because I understand that winning the game of wealth depends on how much you keep, not how much you earn.

The ERR money management strategy focuses on three things:

  • Eliminate (waste);
  • Replace (activities and the methods you perform these); and
  • Reduce (consumption).

Of course, implementing the strategy assumes that you already have a budget in place.

If you’re serious about cutting your monthly bills and winning the game of wealth – whether you’re paying off debt or building capital and investing – you need a budget.

If you still don’t have one, here is how to create a budget. A budget doesn’t have to be a rigid, restricting corset; it can be as comfortable as your favourite pair of shoes.

If you don’t already have a budget, pause here, create one, and then return to this post. You can use the TMP Monthly Budget Planner to help you.

Once you have a proper budget, you’ll be aware of:

  • Exactly how much your income is (weekly, monthly, and yearly);
  • How much you spend (it’s crucial to know this down to the last pound; no approximations); and
  • What you spend your money on.

Having this information is a great start but not enough to reach your financial goals. You need to use this data to make decisions about what to eliminate, what to replace, and what to reduce in your monthly spending.

Let’s dive deeper into the ERR strategy.

1. Eliminate (waste)

Most of us are guilty of wasting quite a bit. We were! We used to waste over £2,000 every month; that’s £24,000 per year. No wonder we were in debt.

Chances are, you too are wasting a significant chunk of your money.

The good news is that you have a budget now; scrutinise it for waste.

Based on my experience, up to 80% of waste in household budgets is on

  • Food;
  • Insurance; and
  • Entertainment

I won’t go into detail here, but we managed to significantly reduce wastage in these areas.

2. Replace activities and routines

To make your money stretch even further, the next step is to find items on your expenses list that you’d like to keep doing but could potentially change the way you do them.

This is where the real fun begins. Because ‘replacement’ isn’t just about being frugal. It’s about becoming a ‘frugal artist’.

We continued to enjoy many of our favourite activities while in debt; we just learned to do them differently. Here are a few examples:

  • We began baking our own bread; it’s always fresh, I know exactly what’s in it, it’s a relaxing activity, and it costs a fraction of what we would pay for inferior store-bought bread. It’s a no-brainer.
  • We opted to entertain more at home rather than dine out at restaurants. It’s cheaper, allows for a deeper conversation with friends, and can include your children. You can even add a little spice to your dinner parties to lighten the mood: I once had a bet with our friends that I could serve a three-course French menu for £1.50 per person. I won!
  • We continued our skiing trips. However, we would book a cheap flight, stay at a friend’s house, and I’d buy half-price ski passes at midday. This was also character-building.
  • I maintained my exclusive gym membership by bartering it for writing and business consulting services.

I could extend the list, but you get the idea. The best part about learning to ‘replace’? The skills you learn stay with you long after you’ve paid off your debt because it’s fun and brings a great sense of achievement.

3. Reduce consumption

We all tend to over-consume. Yes, you need clothes, I agree.

You might even convince me that you need designer labels in your wardrobe.

But do you really need fifteen outfits? Do you need forty pairs of shoes or twenty handbags?

I love my shoes and handbags as much as the next person. I used to own forty pairs of shoes. Then I donated 38 pairs and bought three new ones.

You’ve guessed it! Now I have five pairs of high-quality shoes, running shoes included.

When you examine your lifestyle and routines, you’ll likely find that you over-consume in many areas.

I’m far from a minimalist, yet I’ve managed to reduce consumption in almost all aspects of my life. It’s better for me, my bank account, and the environment. It also cuts my bills!

Try it. It’s incredibly liberating.


All right, I’ve written enough.

I’m off to apply the ERR money management strategy to our budget again.

I’m prepared to bet that I’ll shave off between 15% and 20% from our monthly spending yet again (yes, I haven’t done this for about a year).

Would you like to play?

We can implement the ERR money management strategy together over the next week. I’ll update you about my progress, and you can share your experience in the comments.

What do you say? Are you ready to play the Game of Wealth and cut your monthly bills?

photo credit: Brother O’Mara via photopin cc

25 thoughts on “Easy Money Management Strategy to Slash Your Monthly Bills”

    • @Krant: That’s really good. I was rather good going through it when we were in debt and have not done it for some time. Certainly have some gains to realise :). I find the ‘replacement’ part particularly interesting – it needs so much creativity and ingenuity that it is really great fun.

  1. What we do is once a month is sit down and audit all of our incomings and outgoings.

    First of all we have a spreadsheet which lists all the different types of income we have. Wages; child benefit; interest etc. We then go down them one by one to see if there is anyway to increase the amounts such as asking for a payrise, investing better, earning more from side hustles…

    Once that’s done we move over to the outgoings spreadsheet. This lists everything from bills, travel, entertainment…

    One by one we go down the list and see if it can be reduced. Cutting our food bill, reducing our direct debits, renegotiating our rent.

    We’ve been doing this for the last 8 months and every month we’ve been able to increase our income and reduce our spends. Sometimes only by a few pounds and other times by over £100!

    We’ve almost turned it into a type of game and trust me when I say this; the Skint household do not like to lose!

    Ultimately I think a lot of being able to control your finances comes down to mindset and determination. If you want to be better off financially and you’re motivated, you are 50% of the way there. The other 50% is just math.

    • @ Ricky: Cutting has limits though it is a good idea to keep it going – thing creep in. I love doing the ‘replacement’ and your ‘fakeaways’ are perfect example of that. In our case it was a weekend of wine-tasting in France for the price of one return ticket (£130 or so). John and I had great time – I gave a keynote in Paris (and almost met Pauline from the Savvy Scot and RFI), we were driven to the vineyards and wines and dined for two days. This is to have great friends from different walks of life (when they first mentioned that they make wine I thought they do it like my grandfather mainly for themselves; then I learned they export in 20 countries).

  2. This is new to me, although I suppose we’ve been doing it on some level for a while now. But, I think this is going on my wall as a reminder of what I’m doing and how to do it. Thanks for this!

    • @Gretchen: Glad it is new to you 🙂 because this is what I came up with (the combination and again it is borrowed from medical science – these are the three ways in which experimenting on animals is reduced). Hope you try it to the full, Gretchen, and let us know how much further you managed to make your money go.

  3. I’ve been doing a bit of each one but thanks for reminding me that there is so much more to do! I think I have 1 (Elimination) down to as much as I can now, so need to look at what more I can do for the other two.

  4. I’m in the process of doing a very in depth assessment of my expenses, waste, etc. I’m also thinking about my needs vs. wants. Now that I’ve gained clarity on what I absolutely must have in my life to be happy I’m able to manage my financial life with a sense of purpose. I also think that you have to remain vigilant in terms of eliminating bad habits and developing good financial habits. It’s a process but as long as you’re not too hard on yourself you eventually become comfortable with the process of rocking your money.

    • @Michelle: Quite right it is a process. Also, you’ve hit on an essential part of ‘The Money Principle philosophy of money and everything else’ – personal finance is neither about finance nor about the personal. To sort out ypur finances you have to sort out your life. To understand how money works for you, you have to know how money works in the wider economy. Good luck, Michelle.

  5. Thank you for emphasizing the need to have a budget first — I agree! For us, the very act of making a budget and comparing it to our actual spending each week was easily 50% of the change that got us out of debt and on track. Once we had that we could see which parts of your ERR we wanted to implement and what to change as our life evolved. I’d never ever live without a budget again.

  6. I actually am just finishing up playing my own “minimalist game” where every day you get rid of 1 more thing than the previous day for a month. Day 1 – 1 item, Day 2 – 2 items, etc…

    I’m learning a lot about my consumption and clutter! There’s so much in our lives that we can reduce, it’s amazing to see what you thought you once needed enough to purchase only to realize later that it’s just clutter taking up space.

    ERR sounds like another good way to start this too!

    • @Zee: Hi Zee and welcome. This clutter and consumption thing is something that fascinates me now. Recently I went to New Orleans; I packed an average bag (I travel quite a bit and am used to travelling fairly light). Imagine my surptise when I realised that I brought back quite a few items of clothing without wearing them – now this is weight I could have done without. New time, I’ll be crossing the Atlantic with a small backback.

  7. We’ve been pretty good about eliminating waste and reducing expenses, but I still need to work on our food budget. Our grocery bill is sometimes out of hand for just two people. I think I’ve justified not paying attention to this bill because we really don’t go out and eat, so I’ve indulged in other items at the grocery store to compensate. I need to get this one under control!

    • @Little House: The ERR system is about choice and control, not about cutting everything to the bone. I’m a great believer in allowing a line for fun (including great food) in your budget.

  8. Great article. This is the most effective way to know and learn about this money management. Using this ERR strategy will be very useful and helpful to make your money go further. Read and understand the article and you will get a brilliant idea. Thanks for sharing this article. I will share this information with my friends. Very informative.

  9. Exactly what I need right now. For the past few months, aside from my debt, I wasn’t able to manage my finances very well. Since then, I’ve been trying a lot of ways to improve my spending habits, but I’m failing most of the time. Poor me.. 🙁 I’m going to start doing this method this October.

  10. I’m really focusing on making sure don’t waste food. It’s drastically reduced our bill, but it’s still a work in progress.

    For me, there’s a balance between making meals interesting and often enough I don’t get sick of them — but not so complicated I won’t have the energy to make them.

  11. I love the ERR strategy you detailed.
    We have tracked our income and expenses for years in order to stay on track. Always looking at ways to cut waste but still living a full life. We find our frugal threshold and live without feeling like its a deprived life so our budget is sustainable over the long run. But its important to constantly challenge that threshold to shake loose any waste that occurs as interest and passions change. Great post.

  12. I couldn’t agree more on eliminating waste, this can be done in so many ways like you mentioned. I have 6-7 pairs of shoes in my closet, there is no way I need that many. I need to focus on 1-2 pairs and sell or use till worn, but more importantly not to buy any more. This is just one example.


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