If you are trying to pay off a high-interest rate debt or currently living paycheck-to-paycheck, then it’s imperative to search for ways that can cut down your household expenses. Budgeting can also align you with your ultimate financial objectives so that you can retire earlier and live a more fulfilling life. You will also realize which things are redundant and what is your necessity. Improving your financial situation is no rocket science and you can turn it into a reality by understanding the basics of wrong expenses, actual needs, cost-saving, and cost-effectiveness.
Understand your monthly expenses
If you want to diminish your living expenses, you need to primarily understand the expenses. You have the chance of allocating each dollar that comes your way whether towards spending, savings, investing, donating, or more. Though most of us spend money we aren’t sure where it goes. Having a budget in place will track where your money goes to make conscious decisions on your spending.
Ideas to Cut Household Costs Drastically
If you are trying to reduce your expenses, then you need to start with the biggest ones. You need to be especially cautious about the ones mentioned below:
Reduce your housing costs – This is undoubtedly the biggest expense for most people. You can cut down your household expenses by reducing your housing costs. You can buy a multi-family house, reside in one unit and rent out the remaining ones. In this way, the rent from other units’ will help pay your mortgage so that you can live for free. If you are an existing homeowner, then you can refinance your mortgage to save hundreds of dollars per month.
Cut down your cell phone bill – Everyone doesn’t need an expensive cell phone plan and you can cut your budget by cutting your cell phone plan. If you are using your cellphone to make phone calls to catch up with family, then you can shift to Skyping from your computer. If it’s mostly for texting, then you can download a texting service to your computer for a more affordable option.
Sell your car – If you want to cut your family budget, then selling your car can be a viable choice. You can save thousands of dollars every year by walking, cycling, or taking public transportation to work. Different avenues in which you can save money are maintenance, fuel, monthly EMI, insurance, repairs, property taxes, and vehicle registration. If you can’t live without a car, then opt for a used car so that you don’t have to bear hefty depreciation expenses.
Don’t eat out so often – If you have a large family, then eating out can be very expensive. It’s better to eat at home and attend potlucks with friends and family.
Save money on food – One of the biggest household expenses in a family’s budget is good. On average, we waste 40% of the food bought and this wastage can be reduced in different ways.
- You can engage in meal planning to buy what is needed and reduce food wastage.
- Buy things in bulk during the sale if they have a long shelf life.
- Compare the prices of both store brand and generic items.
- Prepare meals ahead of time for days when you might not feel like cooking.
- Use coupons for frequently bought items.
- Eat leftovers for lunch the next day.
Get rid of cable – You can get a digital antenna and watch the local channels for free.
Buy pre-loved items – You can save money on things you are buying by purchasing used clothing, furniture, etc. Enquire with friends and family about the stuff they are planning to dispose of and as we all know, one man’s trash can be another man’s treasure.
Cancel all subscriptions and memberships – A lot of money adds up to subscriptions of monthly boxes, magazines, games, and more.
Get a roommate – If you have an extra room in your house, then getting a roommate can be a viable solution. Though it won’t make you rich, it will offer a good level of side income without having to try too much.
Reduce your insurance costs – Insurance is a necessary evil that we cannot skip. However, you can reduce insurance costs without sacrificing the coverage amount by comparing the insurance process as old companies tend to increase the premium amount every year. If possible, try raising your insurance deductible to save a hefty amount every month.
Save on groceries – Groceries are undoubtedly the biggest expenses for an average household. Try to shop during sales and avail yourself of different apps that offer groceries at slashed rates.
Lower your utility bills – Utility bills can take a big chunk out of your budget. If you want to cut down the utility costs, then you can try out the following ideas:
- Unplug unused devices as they tend to draw electricity even then. Alternatively, you can get a smart power strip to save on this unnecessary energy draw.
- Smart thermostats can help use electricity by learning your habits. This is a better choice than setting your thermostat at a fixed temperature.
- Switch to LEDs from the traditional incandescent bulbs as they last longer and barely have any electricity requirements.
Make your coffee – You might be a Starbucks person, but this is an extremely expensive habit to have. Rather you can go the DIY way and make your coffee at home.
Don’t splurge on gifts – Rather than spending on material items opt for the homemade route and light up a smile on the face of your loved ones. You can also spend some time with them which is turning into a rare occasion for millennials.
Stop buying too many clothes – Unless you have a fortune, don’t spend too much on clothes. It might soon become a habit that you won’t be able to sustain in the long run.
Switch to a bank that doesn’t charge fees – Various banks charge hefty fees monthly. Rather than paying a monthly account maintenance fee, switch to one which doesn’t levy the same and rather pays you interest on deposits.
Have you been asking yourself for ways to cut back on household expenses? If you have an affirmative response, then our today’s discussion will help you find better ways of adding to your savings meter and setting up your finances for success.