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UW Financial Literacy

Step Down Your Spending

Step Down your Spending was created by Professor Alena Johnson at Utah State University.

How can I reduce my spending?
By following the step-down principle, spending is reduced in gradual stages as opposed to eliminating spending on an item entirely. Can you get your needs and wants met with an item that you may have not considered? Be creative and think outside your box with spending and saving your money.

It may be necessary to say NO to purchases entirely, if you have a lot of debt to pay back or in an extreme situation. Remember to always pay for your four walls, as some financial planners recommend. Your housing, utilities, food, and a way to get to work. The everyday items that you purchase can help or hurt your budget over time.

This is where the step-down principle can help you reduce your overall expenses.

To visualize the “step-down principle,” imagine a staircase with four steps.

On the top step is the most expensive way to purchase an item, and on the floor below the bottom step is the least expensive purchasing method. You can use this method with most things you purchase. Getting your needs and wants met without going over budget.

The step-down principle and some examples:

 

No time to cook? Spending too much on take-out food?

Top step:

Take-out food from expensive restaurant

Third step down:

Takeout food from a less expensive place or Meal prep company (depending on the company and prices)

Second step down:

Buy frozen dinners at store

Bottom step:

Buy some prepared and unprepared items to make a quick meal at home. Scrambled eggs and toast are a quick meal. Bagged salad with tuna on top. Use the internet for ideas.

 

Clothing

Top step:

Shop at department stores and purchase at full price

Third step down:

Shop at department stores for sale only items

Second step down:

Shop at a less expensive store for clothing

Bottom step:

Shop at a used clothing store, buy less

 

Date Night

Top step:

Go to a fancy restaurant and to a movie with snacks

Third step down:

Eat take out from a restaurant at home and then go to a movie

Second step down:

Eat fast food and stream a for-fee movie from Netflex, Hulu

Bottom step:

Cook dinner at home and stream a free movie

 

Coffee

Top step:

Specialty coffee out

Third step down:

Coffee bought at a fast food restaurant

Second step down:

Buy a Keurig or other coffee pod device and make your own at home

Bottom step:

Drink cheapest coffee available at grocery store, preferably on sale

 

Cell Phone

Top step:

Plan with major cell phone carrier, with insurance

Third step down:

Purchase your own phone and reduce plan (data, minutes)

Second step down:

Buy a less expensive phone and plan

Bottom step:

Use an older phone with limited data plan

 

Pickles

Top step:

Artisian pickles at $16 per jar

Third step down:

Artisian pickles for less than $16 per jar

Second step down:

Brand name pickles at grocery store

Bottom step:

Less expensive jar of pickles

 

Can use the step-down method with most items you purchase:

  • Housing
  • Vehicles
  • Food
  • Cell phone plans
  • Shoes

Remember everyday habits do matter.

If you can live without the name brand product or with no product at all, do it. Little amounts of savings add up over time. Positive money habits begin with paying attention to your resources, time, energy, and money.

The habit of saving is itself an education; it fosters every virtue, teaches self-denial, cultivates the sense of order, trains to forethought, and so broadens the mind. T.T. Munger

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