“Step-Down” Your Spending

By Lyle Hansen Jerome Co. Extension Educator/Personal Finance

With today’s rising costs of gasoline, utilities, and day to day household expenses, it is important to make the most out of each and every dollar.  While attending Utah State University, I was introduced to the “step-down principle” by instructor Alena Johnson.  The “step-down principle” is a method to change financial behaviors and if used will reduce day to day spending and create opportunities for saving money.  “Step-down” is a way to look at the items we spend money on and find a way to save money on those items but not doing without.    

How it works:

Think about buying four pancakes for breakfast. The most expensive method (top step of the staircase) would be going to a sit-down restaurant and paying about $4.99 plus tip. The next step down would be to buy the pancakes at a fast-food establishment for around $2.99. Go down another step on the staircase and you might pay $1.99 cents for frozen pancakes purchased at a supermarket.  It would cost $0.30 cents for four pancakes with a ready prepared dry mix. At the floor of the staircase would be the cheapest method of all, about $0.18 cents for a serving of pancakes prepared from scratch.  

The step-down principle also works well with entertainment expenses.  For example, when watching a movie, your choices include a movie theatre, video store, grocery store (grocery stores will often have week-day rental specials), local library, or borrowing from a friend (most of us have large collections of movies and we could easily swap movies).

Step-down can be applied to the frequency and cost of regular purchases.  For example, you may decide to eat out four times a month instead of eight. You're not eliminating eating out; you're simply taking steps to lower the cost.  Or, you might step down by choosing to eat at a less expensive restaurant than you usually do.

When it comes to adhering to a budget, many fail because they try to totally cut the things they enjoy out and end up feeling deprived and resentful.  By implementing the step-down principle, you can find ways to improve your finances without crimping your way of life.  The step-down principle will allow you to remain in control of your budget with its realistic approach.  Using the step-down principle, you will see quick results, which will lead to extra money for other expenses or even more importantly, saving.

For further information or questions you can contact Lyle Hansen, University of Idaho Extension Educator in Jerome County at 324-7578 or lhansen@uidaho.edu