Do your efforts to reduce spending and save money always end in frustration? Like many other people who want to save money, you may be trying to reduce your spending in too broad a category. Finally, here’s the secret to successfully saving money: niche spending!
What is a niche?
Marketing professionals love to talk about niches. Despite its fancy French origins, a niche when it’s at home is simply a sub-category. For example, if a company wants to market a weight-loss product, they might channel their marketing efforts into sub-categories like child obesity, depression-related weight gain, or weight loss for runners. Each of those sub-categories is known as a niche. By focusing on a niche instead of a broad category, companies are better able to target an audience and provide a more relevant product.
What do niches have to do with spending?
Think about what happens when you try to reduce your spending in a broad category; for example, utilities. You scream at your kids when they leave the fridge door open, you forget to turn off the taps when you brush your teeth, and you never get around to installing that low-flow showerhead you bought three months ago. Even if you do take some steps in the right direction, you can’t tell whether the few dollars you save here and there are due to your efforts or luck.
This confusion arises because your spending category is too broad for you to be able to accurately project results. If you break down your utilities into their component parts, you might get trash, water, electricity, internet, phone and gas. Choose one of those and break it down further. Get creative. For example, you might break down phone to get weekend minutes, weekday minutes, long-distance calls, overseas calls, text messages, and late fees. You might break down water into kitchen, bathroom, swimming pool, weekend and morning. Think about all the ways you use water. Don’t worry about how you’re going to reduce spending yet—just brainstorm for niches within your broader spending categories.
Now, choose one niche. Write it on a piece of paper and jot down all the ways you can think of to save money in that category. For example, you could save money in the bathroom by turning off the water while you soap up or brush your teeth, installing a low-flow showerhead and low-flow toilet tank, fixing any leaks, and cleaning with products that don’t require a lot of water. Think about your specific situation and what makes sense for you, not the generic advice you read in a finance column.
Whether you are just starting out in getting control of your personal finances, or you’re an experienced saver, the niche spending technique is the secret to saving money.
What are the benefits of niche spending?
The top 3 benefits of niche spending are:
1. Easier to track.
If you look at your utilities bills all lumped together, it’s hard to know where the fluctuations are coming from. When you are tracking your phone bill over the course of a few months, it’s a lot easier to see what strategies saved you money.
2. Easier to focus.
If you try and save money on everything all at once, you just fluster yourself and create a poverty mentality. When you focus on reducing spending in one niche, you are better able to see creative solutions and cheaper substitutions.
3. Easier to follow through.
If you have a grand plan for saving money across broad categories, how likely are you to follow through? Reducing your spending niche by niche makes it easy to remember and practice good habits.
Using niches to track your spending and plan ultra-focused saving strategies is a powerful way to take your budget to the next level. Whether you are just starting out in getting control of your personal finances, or you’re an experienced saver, the niche spending technique is the secret to saving money.