We all know that inflation is through the roof! That means it costs more to put gas in your car, buy groceries, heat your home, and keep up with the latest trends. Along with all that headache, taxes and insurance rates may go up as well. Suddenly, your paycheck is barely covering the bills, not to mention having to say no to going to your favorite shows. Never fear; we have some tools to get your household’s monthly expenses under control and find extra money for fun. Take a look at our guide on how to save money and cut costs at home!
What Are Household Expenses?
Household expenses are those costs that make up your monthly budget to live in your home. These include things like rent or mortgage, utilities such as natural gas, electricity, phone, water, and insurance. Sometimes other monthly payments are included, such as healthcare fees, gym memberships, cable TV, and the cost of prescription medicines. And, of course, you can’t forget about that pesky credit card debt. This is simply the price to pay if you want to continue living in your home.
On a side note, if you work out of your home or own your own business, there are certain expenses that you can write off on your taxes. Make sure you’re taking advantage of those to reduce your tax burden and save more money. (It just so happens we have some tips for that as well!)
6 Easy Ways to Cut Expenses at Home
There are many ways to cut expenses at home. You can sell possessions, downsize your home, hang your laundry on the line, or shop for cheaper insurance rates. Some of these involve a lot of effort and sacrifice, and it isn’t easy to figure out where to start. Here are six areas to get you started.
Start Tracking Your Spending Habits
Off the top of your head, do you know how much money you spend each month? Many of us use a debit or credit card for most expenditures. We use automatic bill pay or funds transfer to pay bills. As a result, much of our spending is automatic. Stop for coffee. Put gas in the car. Download an app on the phone. Pick up a pizza for dinner. If you stop and add it up, you spend hundreds of dollars without thinking about it.
So, the first thing to do is track your spending habits. You can do this on paper or download an app on your phone. Write down what you buy and how much it costs–no matter how small or large. Do this for a month or two, and then look at the list. What do you notice? How much is that daily trip to Starbucks costing you?
There are no judgments here–this first step is to help you become more aware. While you do not need to take action at this point, you might refrain from a purchase simply because you don’t want to write it down. In reality, you pinpoint wants and needs, which is an excellent first step. You can’t begin to make changes unless you know where you are starting from.
There are several ways to track your spending:
- Carry a pen and paper and jot down what you spend
- Use a notepad on your app
- Collect your receipts (make sure you ask for receipts) and write the expenses down at the end of each day
- Use a tool provided by your bank account (keep in mind that this will only track what you use with your debit card. If you use cash, you’ll need to track those expenses separately).
- Download a personal financial app
A quick browsing of your cell phone apps will garner many options. Some are free, and some have a monthly fee. Some provide graphs, and some might raise your credit score. Choose the one that you will use and provide you with essential information.
Here are some highly-rated apps:
- Simplifi by Quicken
- You Need a Budget (YNAB)
Create and Stick to a Budget
What are your thoughts when you hear the word budget? Does it sound restrictive? Do you say to yourself, “Oh, I’d better not; I’m on a budget.”
A budget is a tool to get you what you want and need. If you set and stick to a budget, you can set aside money for what is important. If you’re not sure where to start, we can provide some guidelines on how to make a budget.
A budget contains set expenses and discretionary expenditures. Here are some ways to manage those areas where it’s easier to cut costs.
Food is one of the biggest areas that you can look at in your budget. How many times have you walked in the door after a long day, starving, looked in the refrigerator at mounds of produce going steadily bad, and called for pizza delivery?
Meal planning is a great way to cut down on food costs. Start with these simple steps.
- Look at your schedule for the week. Do you have lots of activities, or are there days when you spend time at home?
- Pick out several meals that don’t take a lot of time to make, you can prep them ahead of time, or you can toss them in a slow cooker. Roasts, soups, spaghetti, tacos, salads, and roasted chicken with vegetables are easy. Just because you cook at home doesn’t mean you need to make it complicated. Search the internet for quick, easy meals with a 20-minute prep time. Make meals that you can eat twice, or pack the leftovers for lunch.
- Think about what you eat for breakfast and lunch as well. Prepare the coffee pot the night before and hit go in the morning. Pour it into an insulated mug. Flavored syrups and milk can be added for a great homemade latte. Cups of yogurt, frozen pancakes, fresh fruit, or a frozen egg sandwich popped in the microwave are quick and easy. Use leftovers for lunch or purchase sandwich fixings.
- Once you have a meal plan, write a grocery list and head to the store. Stick to the list! If you are susceptible to impulse shopping, order groceries online and pick them up on the way home.
- Meal planning doesn’t have to mean never going out. If you love pizza delivery, put it in the meal plan and budget for it.
If you are new to meal planning, choose a few meals this week to start with. A little effort goes a long way.
Join your grocery store’s rewards program. Go online and set aside coupons that are automatically taken off your bill. Grocery stores have become savvier to provide special coupons for items you’ve bought in the past.
Grocery stores also have store brands (or generics). These items often sell for less than the well-known name brands, and you’ll probably never notice a difference in taste.
Repurpose, Recycle, Refinish
I know that new patio furniture looks great, but how about you just put new cushions on the chairs you have for a fraction of the cost? A new coat of paint on a dresser makes it look like a whole new piece. You can reuse pickle jars for knick-knacks or baskets for organizing. Check social media sites or garage sales for people giving away free or low-cost items (many brand new!). Thrift and consignment stores can be great places to find clothes, books, dishes, sporting goods, and more. At the same time, reduce clutter by giving away or selling items you don’t use anymore.
Re-Evaluate Your Subscriptions
Subscriptions might include cable television, internet streaming services, cell phones, apps on your phone, weight loss programs, print magazines, or more. Sometimes you sign up for a service and find out that you don’t use it as much as you thought. As many of these are deducted from your account or renewed automatically, it’s easy to forget that you are even paying for them. Look at any recurring charges and cancel the ones that you don’t use or don’t need.
Refinance Your Mortgage
If you have a lot of equity in your home, home prices around you are rising, or you have a high-interest rate, check with your bank about refinancing your mortgage. You could end up with a lower monthly payment and extra money in your pocket for debt repayment, school tuition, or a family vacation.
If you have 20% equity in your home, you can request that the bank remove the PMI (private mortgage insurance) added to many loans.
Re-evaluate your homeowner’s insurance. Raising your deductible can reduce your premiums. Ask for a discount if you bundle your homeowner’s and car insurance or if you’ve been a long-time customer. Periodically shop around to see if you are getting the best deal.
Reduce Electricity Use
Electricity rates continue to rise, and there are steps you can take to reduce your energy consumption and keep those bills low.
- Run appliances during off-peak hours. Utility companies charge different rates depending on the time of day. It can cost less if you run your dishwasher or electric dryer at night. At the very least, wait until your dishwasher or washing machine is full before running them.
- Speaking of appliances, invest in energy-star appliances that use less electricity to run. A programmable thermostat can adjust your home’s temperature depending on when you are there. Check with your utility company or government programs that can help offset the costs of new appliances.
- Some electronics, such as a microwave or desktop PC, can draw electricity even when you are not using them. Plug these items into a power strip.
- LED light bulbs use less electricity than incandescent bulbs, so replace your bulbs as they burn out.
- Check with your utility company for additional programs they may offer, such as time-of-use or peak-time savings plans.
Many methods to reduce your household expenses are also great for the planet. Here are several ways to go green while saving money:
- Save on a gym membership and go for a walk or run. You can do non-weight-bearing exercises in the park for strength, do yoga on the deck, or ride your bike to errands.
- Carpooling or taking public transportation will save money on gas and vehicle maintenance.
- Instead of buying paper towels, use rags made from worn-out clothes or towels.
- When packing your lunch, use reusable containers instead of plastic baggies.
- Grow your own vegetables or participate in a community garden.
- Adding solar panels to your house will reduce your electric bill.
- Washing your clothes in cold water saves energy.
- Reduce food waste by planning meals and using what you have.
Consolidate Your Debt and Lower Interest Rates
You could save a lot of money by reducing your interest rates or payments if you have credit card or student loan debts. Likely, your interest rates are somewhere between 16 and 30%. It can be hard to make a dent in large balances by making minimum payments.
Debt Consolidation Loan
A debt consolidation loan is a good option if you have a good credit rating. The idea is that you take out a large loan at a lower interest rate and use that to pay off the smaller debts. You end up with one monthly payment. You can often pay off your debt much quicker than making the minimum payments on a bunch of individual balances.
Debt Management Plan
If your credit is less than stellar, a nonprofit credit counseling agency can assist you by setting up a debt management plan. This plan works similarly to a debt consolidation loan, where you have one loan that replaces all the little ones. The interest rates can be favorable, and a counselor can help you figure out a budget and payment that works with your financial situation.
The Final Say
Little actions can add up to significant savings. Start by looking at each expense and exploring where you can cut costs. Look at your bank and credit card statement each month and ensure there are no billing errors. Compare prices and don’t hesitate to ask for a discount or a better rate. Reach out to relief organizations if you struggle to pay your monthly bills.
Start with small steps like making coffee at home or turning down the temperature on your water heater. Before you make a purchase, ask yourself if it is something you really need or if you can live without it.
One way to control your expenses is to freeze your credit card spending and pay cash for all discretionary expenditures. This will encourage you to look closely at your spending. Even if you are not struggling with paying your bills, it’s wise to keep a close eye on where your money comes from and where it goes.
Want more tips? We’ve got them! Explore even more helpful articles on business, finances, and how to save money at home.