Are you struggling to make ends meet? You are not alone; many Americans are facing the same situation. Managing expenses can be rough, but it doesn’t have to be. It just takes a little know-how to drastically cut expenses. In this guide, we’ll cover the most effective ways to cut costs so you can start to save money on your monthly expenses.
How to Drastically Cut Your Expenses to the Bone
Want to save money? Looking at drastically cutting expenses? The right way to do so is to spend less. But how? It’s easy to say, but not so easy to do.
If you want to cut your expenses, you can follow the tips below and make it happen. From meal planning to finding more affordable car insurance, there are plenty of ways to save a buck or two!
Start Tracking Your Spending Habits
You can’t cut monthly expenses if you don’t know how much money is going out. The first step to reducing your expenses is to know where your money is going each month.
If you’re not sure where it goes, there are several apps and websites out there that can help keep track of your spending habits. Some of them even have features that let you set up budgets and limits on how much money can be spent on certain things like groceries or gas. This can be very helpful if you want to make sure that your family doesn’t go over budget with certain expenses.
If you’re not sure where to start, try a free service like YNAB (You Need A Budget) or Personal Capital (which offers a free trial period).
If you don’t already keep track of your spending, now is the time to start. It’s not as hard as it sounds—all it takes is a little organization and willpower.
Slash Your Grocery Budget
If you are like most Americans, groceries take up a big portion of your budget each month. To reduce this expense, try these tips:
Make a List
When you walk into the store without a list and no idea what you’re going to buy, it’s easy to get distracted by all the great deals on sale and end up spending more than you intend. To avoid that scenario, make a list before you go shopping and stick to it. If there is something specific you want, then include it in your list so you won’t be tempted by something else when you’re in front of the deli counter.
Go Generic
Cutting expenses at the grocery store is easier than you may think. Generic and store-brand products are often less expensive than their name-brand counterparts because they don’t spend much money on marketing. But this doesn’t mean that they skimp on quality—many generic products score higher than the name-brand items in taste tests conducted by Consumer Reports.
Some generic products may not look or taste exactly like their name-brand counterparts. But if you don’t care about those things, buying generic is a great way to save money.
Stop Eating Out
If you’re not a professional who eats lunch at work, then you should already know that eating out is expensive. But if you are like most people, it’s hard to resist the temptation of a restaurant meal or coffee shop treat when you get hungry. The easiest way to cut back on eating out is simply to avoid it altogether. If you find yourself yearning for takeout, then consider making your own meals at home instead of going out.
If you can’t imagine giving up restaurants completely, you can still save money by limiting your dining-out intake to only once per week (or every other week). Start with a monthly budget for take out food.
Reduce Electricity Use
The average American household spends over $4,000 per year on utilities. That’s a lot of money! And it can be cut down by as much as 30 percent with some simple changes in your electricity usage. Reducing household expenses is a good way to save money.
Here are some tips to help you reduce your utility bill:
Unplug Electronics
Many electronics use energy when they are turned off—especially if they are plugged into an outlet that’s still on. Unplugging them will save you money and keep them in good condition for the next time you need them.
Turn Down the Heat
That’s right—just turn it down! You don’t need to turn off your heat entirely to save money. Just turn it down a little, and you will still feel warm while saving money on your energy costs.
Use Energy-Efficient Appliances
Energy-efficient appliances use less energy than their older counterparts, so they will cut down your overall utility bill and lower your carbon footprint at the same time.
Replace Light Bulbs With LED Bulbs
LED bulbs last longer than other types of light bulbs and use less electricity, which means they are a more efficient option for your home or office space.
Electricity bills account for a significant portion of most people’s monthly expenses, so reducing electricity use can have a big impact on your bottom line.
Consolidate Your Debt and Lower Interest Rates
If you have multiple debts, it’s important to consolidate them into one loan. This will help you get a lower interest rate on the overall balance, and it will make it easier to track and manage your finances. Plus, you’ll be able to save money on interest payments over time.
Debt Consolidation Loan
This is a great way to save money and get out of debt at the same time. A consolidation loan is a loan that allows you to combine multiple loans into one new loan with a lower interest rate. To qualify for the best rates, you will need good credit history and a steady income. If you don’t have it yet, take steps to build your credit by making on-time payments for two years or more before applying for any kind of consolidation loan.
Debt Management Plan
A Debt Management Plan (DMP) can be a great way to cut down on your monthly debt repayments and is a good solution for people who are struggling with their finances. A DMP can help you reduce your debts, pay off your debts more quickly, and often comes with better interest rates than other repayment methods.
What is a Debt Management Plan?
A Debt Management Plan (DMP) is an agreement between you and your creditors which allows them to take only part of their usual payment each month. The remaining balance is then consolidated into one monthly payment that is paid to the provider or company running the plan. This means that instead of having multiple payments due each month, there will only be one payment which gets paid towards all the debts combined. The benefit of this is that it allows people who have been struggling with their finances to get back on track quickly by making fewer payments each month rather than many smaller ones.
Reduce Your Insurance Premiums
Insurance is one of the biggest expenses for most Americans. It’s also an area where you can find ways to cut your costs without sacrificing too much coverage.
Here are some tips for reducing your insurance premiums:
Shop around. Your current carrier may not be the best deal out there. Check with other companies, and make sure you are comparing apples to apples when it comes to deductibles, coverage limits, and so on.
Consider dropping optional coverage. If you don’t need it, don’t pay for it.
Drop collision coverage on older vehicles that are worth less than $1,000. This coverage is often more expensive than comprehensive coverage on newer cars or vehicles with higher values.
Pay Off Your Outstanding Debts
One of the best ways to cut expenses is to pay off all your outstanding debts. This means credit cards, loans, mortgages, and other bills that you owe money on. Paying off these debts will give you a sense of relief and control over your finances for the first time in a long time.
Once you have paid off all your outstanding debts, it is time to start saving some money. You may not be able to save much at first while paying off those debts, but once they are paid off, there will be more room in your budget for savings and investments.
Challenge Yourself to Drastically Cut Living Expenses
A good way to save money is to challenge yourself to drastically cut living expenses. This doesn’t mean living in poverty or discomfort, but it does mean challenging yourself to live on less than you currently do and seeing how well you manage. This can give you a real appreciation for what it means to live on less and help you develop the skills necessary to reduce your expenses even further in the future.
Here are some ideas:
No Spend Days
One of the easiest ways to cut back on your expenses is to simply take a day off from spending money. It is not as hard as you think, and it is a great way to get a sense of how much money you are really spending.
Use that day to do things that don’t cost anything—like walking around the city or going for a hike in the woods. Or, if you prefer, use that day to stay in bed all day and read books or watch movies (just remember not to buy those books or movies!). You can also use this time to volunteer and help others who might not have the same opportunities as you do.
Fun Money
Cutting back on your entertainment budget is an important step to saving money. You can cut back on this expense by reducing or eliminating your cable subscription, limiting the number of times you go to the movies or shows, and eliminating subscriptions to magazines, newspapers, and other publications.
You may not be able to eliminate all your fun-money activities—and that’s OK. But if there are ways for you to cut back on some of these expenses without sacrificing too much enjoyment, then do it!
At-Home Date Nights
Date nights are essential. They’re a great opportunity to reconnect with your partner and enjoy each other’s company in a way that doesn’t involve kids, work, or Netflix binges. But who has the time or money for fancy restaurants and long weekends away?
You don’t have to go out on the town and pay for expensive meals or drinks (and tip!) when you can make your own food in the comfort of your own home. Plus, it can be much more fun than going out!
Here are some ideas for at-home date nights:
- Have a picnic in your living room. You can do this by laying out blankets on your couch or coffee table, then filling them with snacks and drinks from the kitchen.
- Take a walk outside. This is perfect for warmer months when you want to get some fresh air but don’t feel like going out of town or spending money on gas for an outing. Just grab some jackets and head outside!
- Have a movie marathon at home! Pick out some movies you have been wanting to watch together (or just ones that will make each other laugh) and start watching them at once—you will never want to leave!
Having an at-home date night is a really easy way to cut expenses without feeling like you’re missing out.
Why You Should Keep Household Costs Low
Whether you are trying to save money or just get ahead, it’s always a good idea to keep your household costs low. The reasons for doing so are simple:
It’s Easier On Your Wallet
The less money you spend, the more money you have to put toward other things you may want or need. This can be especially important if you are in debt—paying off credit card debt is much easier when you aren’t spending any more than necessary on day-to-day expenses.
It Can Help Improve Your Financial Health
Keeping your expenses low can help keep your credit score high and make it easier to qualify for other loans and lines of credit in the future. It can also help prevent late monthly payments by helping you stay on top of bills that might otherwise go unpaid if left unchecked.
You can’t afford to keep your household costs high. Life is already expensive enough, and you need to make sure you’re not wasting money on unnecessary expenses. Instead, focus on cutting back where it counts—and making sure you are getting the most out of what you do spend.
The Takeaway
You’ve heard the saying, “A penny saved is a penny earned.” It turns out that’s not just a cute saying—it’s true.
If you are looking to save money, then cutting your expenses is the way to go. This is especially true if you’re trying to save up for something big, like a down payment on a house or starting your own business.
The challenge is that cutting back on everyday expenses can be hard, especially if you’re used to spending freely. But don’t worry! Using the tips above will help you slash expenses so you can save more cash in no time!
If you’re looking for more money-saving tips, check out these helpful articles.
