When we talk about the best ways to cut household expenses, the first piece of advice that always gets thrown out is “stop drinking $5 coffees every day”. But what if you were never drinking $5 coffees every day anyway!?
There are much more realistic, simple, effective ways that can save you a lot of money in little time. Cutting household expenses and adjusting to a new budget doesn’t have to be too uncomfortable. Let’s talk about easy ways to make some simple financial changes for long-term success.
Conduct a money audit.
The first step in saving money is to figure out what’s coming in, what’s going out, and most importantly, where it’s all going. Print off your bank statements for the past 3 to 6 months. If you’ve already made some recent changes, 3 months of bank statements will do.
If you really want to dig in and figure out where your money has been running off to, print the full 6 months. Printed statements of your bank accounts will give a first look at where things can change.
Grab a few highlighters and go through your bank statements line by line. Set it up however you want, but for example, you can use pink for income, yellow for necessary expenses, and green for unnecessary expenses or items to cut out. This is an easy way to see how much is going to each category.
Next, go through all of the unnecessary expenses and figure out which ones will be the least painful to cut. Is there a gym membership you haven't been using? Or a music subscription service that you only listen to in the car a few minutes a day?
Make a list of which expenses we will cut first, second, third, and so on. You can do this in phases so it’s not a huge change all at once. If you have big leaks in your budget and are drowning in debt, you should take this process more seriously and cut expenses as much as possible right away.
Patch the leaks.
Rather than quitting everything cold turkey and cutting out all of your expenses at once (which isn’t realistic in the long-term), make small changes to “patch the leaks”, so to speak. Any money that’s unaccounted for month to month is a leak. Any money that goes to fast food unnecessarily is a leak. These “leaks” alone can put extra money in your budget to be spent more wisely.
Some leaks you may not think about at first may include utilities, food, and entertainment expenses. This doesn’t mean you have to cut out entertainment completely, or that you have to switch to the off-brand for all of your food.
It just means you’re going to be aware of where every single penny of your income is going, so you can make sure it’s accounted for and being spent responsibly. Everyone should have an entertainment budget, and nobody should have to eat off-brand bread!
If you are struggling to see the leaks, commit to 30 days of using your debit card for every single purchase so you have a paper record of everything you spend. Cash is far too easily spent unaccounted for. When you have to use your credit card for everything it can also help curb impulse buys which alone will bring down your monthly costs.
Utility bills such as cable, internet, and cell phone can make up a large chunk of your monthly expenses if you’re not careful. If you use the internet for work, downgrading to a slower internet speed isn’t practical.
However, you can easily cut the cable bill and get a cheaper streaming service like Netflix or Hulu if TV is a priority to you. You can even purchase a digital antenna to access some channels at no cost.
You can significantly decrease your power bill by adjusting your air conditioner only a few degrees. While I would never suggest you be uncomfortable in your home, two to three degrees can make a big impact on energy costs in the long run. Also make sure you are using high-efficiency light bulbs as they can make a big impact too!
Call your cell phone service provider and negotiate a lower rate on your cell phone bill. Ask about military or veteran discounts, AARP discounts, etc to make sure you are getting the best deal. Any discount they may have, see if you can get it!
Some companies even offer discounts for law enforcement, first responders, and teachers. If the discounts are there and you qualify, you might as well utilize them. Sometimes you can even get a better price on your bill by upgrading your phone!
If it has been a while since your last traffic ticket, call your car insurance provider to see if there are ways to bring down your monthly payment. Also, make sure you are only paying for what you truly need.
If you work from home, make sure your agent knows you are not commuting for work every day. You can also easily shop insurance companies to make sure the auto insurance coverage you need is at the best rate possible.
You can also negotiate with your credit cards by asking for lower interest rates or waived annual fees as well as ask to change the due dates to make it easier to spread your expenses throughout the month. You can do the exact same thing with student loans.
Watch your food expenses.
Even if you aren’t eating fast food every day, grocery bills alone add up fast. The grocery store is full of temptation, and even with the best of intentions, it is very easy to overspend.
Our grocery bill was drastically reduced once we started to meal plan and use curbside pick-up services. Ordering your food online and picking it up outside the store may be one of the best money-saving inventions ever because it drastically lowers impulse buying.
With grocery ordering, you can make sure you stick to your grocery list and do not end up with a bunch of random ingredients that sounded good at the time. Often the grocery apps will suggest even better deals on the products you order and can alert you when your favorites are available at a lower price.
Using curbside pick-up or grocery delivery means no more last-minute impulse purchases in the checkout line, making it much easier to stick to your food budget. You will only receive what you put on your shopping list. This will not only save you money but save you time as well. It is a total win-win.
Reevaluate entertainment costs.
How much are you spending on entertainment each month? Whether it’s a Playstation subscription or video game, or going to the movies or bowling, what’s your budget? If you don’t have one yet, now is the time to work on creating one.
Like I said earlier, entertainment is important. We don’t need to cut it off completely, but being aware of how much we are spending and making sure it relates to how much it enhances our life is a critical step to cutting household expenses.
After you’ve finished your household financial audit and patched the leaks, it’s time to set a budget for entertainment. Being on a budget doesn’t mean you have to lock yourself in the house all day, but it does mean making smarter choices with the money you’ve set aside for certain activities.
Instead of spending $50 going to the movies, find a theater that is showing old movies for $2 per person. Or, watch the movies at home with popcorn that costs 1/10th of the price of movie theater popcorn!
Also, if you were someone who was enjoying those $5 a day coffees, give yourself a budget so you know how many times you can visit the coffee shop and how many times you need to make your favorite cup at home. It is important to not cut everything out completely, but once you are more mindful of your spending, you can make the right choice with your entertainment budget.
Making small changes like this makes budgeting less painful. You can even turn it into a game. Have everyone in the family figure out the cheapest way to have a family date night. Alternate family nights at home, with board games and popcorn, and going out. Finding cheap bowling days and times, cheap movie days and times, etc will ensure your family never gets bored but also doesn’t go over budget.
One last thing to check, if you didn’t with your audit, is your recurring subscriptions via Paypal. Also check your Cash App, Zelle, or other payment methods you use. The idea is to track every single dollar that comes in, and goes out. Once you start doing this one simple thing, the rest falls into place rather seamlessly!
The next steps…
After you’ve worked on cutting household expenses in a painless way, you may need to go back through and be even more ruthless with expenses to reach your financial goals. Or, you may want to work on creating more income with side hustles. You can drive for companies like UberEats, or you can create your own streams of income online like hundreds of thousands of others do every day. No matter what your financial situation is, it can improve with planning and budgeting!
These simple tips of Ways to Cut Household Expenses can make a big impact on your future financial success. It is never too late to make good financial choices and alleviate money stress.