The Step-Down Principle is one of my favorite personal finance concepts. A great tool to help you spend less and find more money each month to knock out debt, build an emergency fund, save for a vacation, etc. in three easy steps! Let's dive in!
I first learned about The Step-Down Principle from Alena Johnson, Principle Lecturer at Utah State University and creator of the concept. She explained it this way:
1. Imagine a staircase.
EXAMPLE: Going to the Movies
The top step represents the most expensive way to see a movie while the bottom step represents the least expensive way. See the example below:
EXAMPLE: Eating dinner
Imagine the most expensive way to eat dinner (top stair of the staircase). Let's say that's at a nice restaurant and your meal includes a drink, an appetizer, a main dish, and a dessert. Now take one step down the staircase and imagine the next least expensive way to eat dinner. This could be eating at the same restaurant but skipping the appetizer and dessert. Another step down may be to have dinner at a less expensive restaurant and skip the appetizer and dessert. Still another step may be to eat dinner at home and go out for dessert only. Continue down the stairs until you come to the least expensive way to eat dinner (to cook at home from scratch). This is the bottom step of the staircase.
NOTE: You may also consider the number of times you eat dinner at a restaurant in a month and decide to step down to fewer times in a month.
DON'T FORGET: The key to success with this personal finance principle is to not expect yourself to go from the top step all the way to the bottom step in one attempt. The best practice is to take one or two steps down at a time and once you become comfortable there, take another step or two down if you're still trying to decrease expenses or find extra wiggle room in your budget each month. Set realistic expectations and you’ll do great!
Use the Step-Down Principle at the grocery store, out to eat, at the movies, or when deciding what to do this weekend. The Step-Down Principle can apply to any area of your budget. It’s completely customizable. Next time you're headed out to eat or to the movies (as per the examples above), stop and ask yourself, “How can I step down what I spend to save money?”
Alena Johnson, Principle Lecturer at Utah State University, is the creator of the Step-Down Principle. If you’d like to see more of her awesome financial advice and tips, check out the Financial Checkup. You can find out more about the Financial Checkup on the Utah Money Moms resource page.
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