Wanting to be financially free is like coming up with a New Year’s resolution: a lot of people try to work towards a goal but find themselves falling back into old habits.
Saving up and cutting down on costs may be one of the hardest things to do, especially if you’re living from paycheck to paycheck. Add to this the rising cost of almost everything on the market, and it seems almost impossible to save even a penny.
In the long run, you’ll likely end up working to the bone but still not have enough for emergencies or your retirement. The worst part is your debts might sink whatever little savings you have down the drain.
But we’re here to tell you that being financially healthy isn’t just a pipe-dream. In this article, we discuss simple but actionable steps on how to drastically cut household expenses to save money.
Let’s take a look at some of the ways you can make this happen:
Review Your Monthly Expenses
The first step to solving any problem, especially a financial one, is to identify the source. In this case, reviewing your monthly expenses as opposed to your monthly income will help you pinpoint which areas pose an issue.
To do this, practice the habit of keeping receipts, bills, and statements from your bank or credit card. You can even look for old receipts just to give you a bird’s-eye view of where your money has been going.
The point of this exercise is to let you thoroughly examine whether or not you’re spending on the right things in the right way.
This also allows you to come up with important questions that can help in financial self-assessment. Some of these questions can include:
- Am I living beyond my means?
- Do I really need to buy or pay for these things?
- Is there a more affordable option for this service?
- Is there another way I can get this service for free?
While reviewing your expenses, you’ll be able to separate non-essential purchases from essential ones. When you’ve done so, it’s time to see how you can cut down or completely eliminate what’s unnecessary.
Cut Down on Non-Essentials
After getting a grasp of how much you’re spending each month, the first things to go would, of course, be non-essential items. These are items that you can live without.
Now, you might be thinking that some “non-essentials” are things you can’t live without. But once you eliminate these from your life, you might be surprised to discover that you can live without them — it’s just a matter of getting used to their absence.
Some of these non-essentials include:
Cable
According to Statista, around 34% of adults living in the U.S. have paid between $51 and $100 for monthly cable TV in 2019. But because of the rise of Netflix and other subscription platforms for on-demand videos, cable TV subscribers are decreasing while monthly costs have increased.
If you haven’t been watching TV all that much, then canceling your cable subscription can save you hundreds of dollars a month. The money you save can then go to more necessary purchases.
Dining Out
Going to restaurants and dining out can be a good way to bond with friends and family. Others dine out because they might not have time to cook, or don’t like to.
Whatever the case, it’s no secret that dining out can be expensive. You might think that a $10 meal doesn’t cost so much, but do this frequently enough, and you might just be blown away that you’ve spent thousands of dollars on what’s supposed to be cheap restaurant meals.
Instead of dining out, prepare your meals at home, or host potlucks with your friends if you’re celebrating an occasion. We’ll talk more about home-cooked meals a little later, but aside from being cheaper than going out to a restaurant, you can also eat healthier if you prepare food at home.
Entertainment
You might not be aware of it, but you may have subscribed to a music-streaming service, an audiobook platform, a magazine or news website. After all, these services only tend to ask for a low fee, which might not really be a problem.
However, keep in mind that saving even a little can help a lot. Evaluate how frequently you use these services, and if you haven’t been taking advantage of them fully, it’s best to cancel your subscription instead.
Cut Down on Essentials, Too
Just because some purchases are essential doesn’t mean you have to spend a lot for them. There are ways you can still cut down on necessary household expenses like food and utilities.
Here’s how:
Food
Since food is a basic necessity, it is perhaps one of the largest expenses you have to make next to rent or insurance. However, it’s a common misconception that for you to eat well and eat healthy, you need to spend a lot on groceries.
There are two simple but effective ways you can save on food and have enough to go around for the whole family:
- Plan your meals: Meal planning doesn’t only involve coming up with a menu for the week. It also gives you an idea of how to properly portion ingredients to minimize food costs and waste. You can also save cooking time this way since you’ll know which ingredients to prepare the night before. And since time is money, you’ll be saving on both.
- Rework leftovers: With a little creativity, you can rework leftovers into “new,” fresh meals. Too much soggy spaghetti from last night’s dinner? Stir fry the noodles and add in some spices. Bread getting stale? You can use them as croutons or for some french onion soup.
Water
This isn’t to suggest that you should skip bathing regularly. Saving on water consumption only means being economical with your water usage.
A few ways you can do this is by turning off the faucet when you’re not rinsing your hands or while brushing your teeth. If you’re manually washing dishes, arrange all the dishes first, soap each one, then rinse.
These might seem like small things, but they can translate into great savings when your water bill arrives.
Electricity
Not many people are aware that keeping your gadgets plugged in despite being switched off can result in latent power consumption. Aside from using power strips that have individual on and off buttons, unplug your gadget from a socket if they’re not being used or aren’t charging.
If possible, cut down on your air conditioning usage by opening your windows to let air in during the summer. Save on water-heating costs by having a thermos to keep your tea or coffee water warm all day (this also works when keeping iced drinks cool).
One other thing is to avoid using “octopus” connections. This doesn’t only cut down on electricity costs, but also lowers your chances of having a fire break out because of a short.
Be a Smart Shopper
Smart shopping isn’t only applicable to when you’re buying groceries or clothes. This can also work for virtually anything you’re about to purchase as this simply means not settling for the first item you come across.
Take your time shopping and apply some of these money-saving techniques:
- Compare Prices - From baby shoes to insurance premiums, there’s a whole world of savings you can gain from comparing prices between similar items. Chances are, there’s always a more affordable option if you look hard enough. The trick is to give yourself enough time to shop and compare. Also remember to not just look at upfront costs, but also expenses you might need to make later on. A good example is if you’re buying a secondhand item. The initial cost might be cheaper, but you might end up paying more for repairs if you’re not careful.
- Use Coupons or Wait for a Sale - If you can help it, don’t just buy something off the fly. Wait until there’s a sale or an available discount coupon for that specific item. It might take a while, but the wait will be worth it when it translates into actual savings.
- Buy in Bulk - In some cases, it might be better to buy in bulk if it’s an item that won’t spoil or has a long shelf life. Instead of buying a small pack of diapers or toilet paper, buy a large one. If your family loves to put ketchup on everything, get a big bottle. Not only will this let you save on retail prices, but you also won’t have to make frequent trips to the grocery, which can translate into gas savings as well.
Travel Wisely
Speaking of saving on gas, there are also ways you can minimize transportation costs in your household.
Simply having a gas budget might not be the most feasible solution because of its fluctuating prices, but you can still cut down on fuel costs by considering the following:
- Trade in Your Car - Having a bigger vehicle often means a higher gas consumption. If you don’t really need big cars like an SUV or van, trade it in for a smaller sedan. Similarly, when you’re looking for a new car, choose one that’s more fuel-efficient.
- Plan Your Trips - Mapping out the route to your destination can also result in fuel savings since you won’t have to travel back and forth. This can be especially helpful if you’re planning to drop by multiple locations. For instance, if you need to drop the kids off to school, then go to the grocery, the bank, and the post office, determine which places are close to each other to save on both gas and time.
- Carpool with a Friend or Colleague - Traveling is always great if you have a companion, but in this case, carpooling can let you save on transportation. Whether you’re the driver or the passenger, you can always make arrangements to split the fuel costs between the other people using the vehicle.
- Find Alternative Ways to Travel - If you can do without a car, you’ll be saving yourself the trouble of paying for automobile loans and insurance. If possible, try alternative ways of traveling by biking or using public transportation such as buses or trains. If you’re going to a place nearby or just within your neighborhood, you can also take a nice walk, which won’t just save on gas — you’ll also get to exercise, and for free!
Every Penny Counts
Cutting down on household expenses to save money doesn’t need to be complicated. It all starts with a thorough examination of where your monthly income goes, and from there you can apply the simple steps discussed above to stay within your budget.
While some techniques might not seem like they would save a significant amount, it’s important to remember that every penny counts.
However, the journey to financial health doesn’t just stop by saving. You must also make those savings count and work for you by investing it in a goal, such as a business, a dream home, a retirement fund, or the like.
For this, you can reach out to us to learn about more ways on how you can successfully navigate life’s most crucial financial moments.