How to Create Margin in Your Budget: 7 Ways

We often hear people say, “I don’t have enough money to give,” or “I just wish we had more breathing room in our budget!”

What these people are desperate for is financial margin.

Having that extra money each month gives you more freedom to give, save and spend as God calls you. You don’t have to stress over every unexpected expense or feel like your money is already spoken for. You have options.

And that’s one of the most freeing things you can experience financially. You can use the income God has entrusted to you in a way that honors Him instead of being forced to spend it all on debt and necessities. By spending less and finding ways to make extra money, you can create more margin for the things that matter most.

Good news, guys! That freedom is possible for you too. But it takes being intentional about managing your money well and having a vision for the future. Proverbs 29:18 says, “Where there is no vision, the people perish” (KJV).

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Where are you really at with money?

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Here are seven ways to start creating that margin in your budget.

How Do You Create Margin in Your Budget?

You can create margin in your budget by making a plan for your money and finding ways to spend less. Start with a zero-based budget to see where your money is going. Then look for opportunities to cut back, whether that means downsizing your home, driving a less expensive car, canceling unnecessary services, or being more intentional about everyday purchases.

Let’s take a closer look at seven ways to free up more money each month.

1. Make a monthly budget.

A monthly, zero-based budget is the number one way to find margin. With zero-based budgeting, you give every dollar a job by subtracting all your expenses (including giving and saving) from your income until you get zero. That way, you know exactly where your money is going and can spot areas where you might be overspending.

Want a raise? Then budget, and it’ll feel like you gave yourself a raise! You’ll find money you didn’t know you had—money that’s been leaving your pocket while you’ve been distracted.

2. Downsize your home.

If your mortgage or rent payment is more than 25% of your take-home pay, you’re spending too much on housing. For homeowners, that 25% includes your principal, interest, property taxes, homeowners insurance, PMI and HOA fees (if applicable).

This is a great place to create margin because housing is probably the biggest expense in your budget. Moving to a less expensive home or apartment could free up hundreds of dollars each month that you can then put toward your other money goals.

Just ask Brayden, who shared in THE Ramsey Baby Steps Facebook Community, how downsizing his rental and selling his car helped his family free up $1,000 a month:

“Over the last six months, we downsized our renting situation to save $500/month and sold the car to pay off the loan and save another $500/month.”

“Over the last six months, we downsized our renting situation to save $500/month and sold the car to pay off the loan and save another $500/month.” – Brayden

That’s $1,000 a month back in their budget! And while Brayden admitted the sacrifices weren’t easy, those changes helped his family become debt-free.

3. Downgrade your vehicle.

If the value of everything you own with an engine totals more than half your household’s annual income, it’s time to downgrade. Anything with an engine—whether a car, boat or motorcycle—is depreciating, meaning it’s going down in value. And if you have too much of your net worth tied up in things that are going down in value, it’s a drain on your budget—and your margin.

4. Cancel unnecessary services or do some yourself.

Cancel services you don’t truly need, downgrade to cheaper plans, or do some of the work yourself. For example, do you really need cable, or could you switch to streaming services instead? Maybe you could save a few bucks by switching to a cheaper ad-supported plan.

And think about the household tasks you’re paying someone else to do. Lawn care, house cleaning and pest control all add up when you hire someone else to do them.

5. Make a plan before you go shopping.

Knowing how much you plan to spend and what you’ll buy before you enter the store keeps you from buying on impulse. This goes for everything from clothes to gifts to groceries.

And speaking of groceries, with prices these days, you definitely don’t want to walk into the store without a plan! Decide what meals you’ll make for the week and write down all the ingredients you’ll need before you go. That way, you can stick to your list and avoid buying things you don’t need.

6. Lower your insurance costs.

Once you have a fully funded emergency fund, you can begin to increase the deductibles on your insurance policies. Your deductible is the amount you pay out of pocket before your insurance kicks in on a covered claim. By choosing a higher deductible, you’re taking on more of that cost yourself, which will lower your monthly premiums.

Another way to save is by working with an independent insurance agent who can shop around and compare quotes from multiple insurance companies for you. They can help you find the right coverage at the best price.

7. Borrow first, rent second, buy third.

You sometimes need an expensive item like a tool one time. Before you buy something you won’t use very often, see if you can borrow it or rent it instead. If borrowing or renting isn’t an option, make sure the purchase fits your budget.

Why Does Budget Margin Matter?

Budget margin matters because it keeps debt and monthly bills from eating up every dollar you earn. That means you can focus more on what matters most instead of constantly stressing about money.

If you’re desperate for a little wiggle room in your budget, it’s not out of reach for you. But you have to be intentional about budgeting your money and making sacrifices in the short term to reach long-term goals. With margin, you can stop worrying about your next paycheck and start concerning yourself with living for Jesus and for others.

And it all starts with a plan. With EveryDollar, you can create a zero-based budget, track your spending, and find opportunities to free up more money each month. So, give your money a plan today and start making room for what matters most.