Looking for a few simple tips that’ll help you save some money on your monthly expenses? You’ve come to the right place!
Reducing your expenses can be a challenge, particularly when you’ve grown used to a certain lifestyle or standard of living. Rest assured, the tips you’ll find within this article are easy to implement and won’t change your daily life significantly (other than helping you save up some cash.)
Before we get into the tips, it’s important that you follow the directions in the next two sections, which revolve around outlining your goals and creating a budget. These two steps will ensure that your mission to reduce your monthly expenses is a successful one.
Clarify your financial goals
Before you start identifying ways to cut costs, it’s wise to make a list of your financial goals. What are the reasons you’re looking to reduce expenses? What do you intend to gain by saving money each month?
Maybe you’re saving up to put a down payment on a house, building an emergency fund, or socking away money for a rainy day. Whatever the reason is, you’re going to want to keep it at the front of your mind – when there’s meaning behind your savings plan, it’ll be much easier for you to commit to it long-term.
Want to learn more about financial goals and how to set your own?
Take a look at our article “How to Set Up Financial Goals for Success”.
Create a budget
Without a budget, there’s no way to determine how much money is going in and out of your bank account every month. Once you create one, it’ll be much easier to manage your money, track your spending, and identify opportunities to save.
To start your budget, you’ll first want to estimate your monthly income. Many people fall into the trap of spending more than they earn, but once you clearly define how much money you make each month, you can avoid this common problem.
Next, you’ll divide your monthly expenses into wants and needs. Needs include everything you can’t survive without, for example: food, rent/mortgage, utilities, transportation, cell phone service, insurance, and credit card or loan payments.
Wants include the things you can live without spending on, like going out to eat, shopping, and entertainment. When you’re looking to reduce spending, the expenses in your “wants” should be the first to go.
Then, you’ll create budget categories and assign a spending limit to each. Some of your expenses, like rent and car payments, will be fixed – others, like food and utilities, may change month to month. Once you’ve broken your budget down into categories, it’ll start to look something like this:
Monthly income: $1600
- Rent: $600
- Utilities: up to $100
- Food: up to $250
- Cell phone: $50
- Car payment/insurance: $300
- Savings: $300+
After this, all you have to do is decide how to track your budget – old school pen and paper works fine, but there are a number of great, free apps available as well. To learn more about creating a budget and the best tools for managing one, read our article “How to Create a Monthly Budget”.
Now that we’ve got these first two steps covered, we can dive into the tips that’ll help you start saving on your monthly expenses. To begin, we’re going to share a few simple ways you can save money on food.
How to save money on groceries
Many of us acknowledge that eating out is a convenient luxury, yet still fall into the expensive habit of ordering food regularly. If you tend to eat out a few times a week, your takeaway orders could be making a significant dent in your income.
There’s no faster way to reduce expenses than cooking meals in your own kitchen, so up next, we’ll share a few tips that’ll help you stretch your grocery budget a bit further.
Make a list and stick to it
How many times have you entered a store to buy one item and walked out with a handful of things you didn’t need? It happens to the best of us, which is why writing a grocery list before food shopping is essential.
In addition to bringing a list, be sure to eat before taking a trip to the grocery store. You’ve likely heard it before, and it’s true – research has shown that shopping while hungry causes us to overspend and make impulsive purchases.
If you’re not a fan of using coupons, you’re far from alone – but you’re also missing out on some quick and easy savings. According to U.S. Consumer Packaged Goods (an organization that distributes billions of coupons annually) only 1% of shoppers redeem coupons!
Believe it or not, you don’t have to live and breathe coupons to save a decent amount of money on your grocery bill. With a minimum investment of an hour or two a week, you could save upwards of $120 – $200 a month (or $1,440 – $2,400 a year) by clipping coupons.
There’s a stigma surrounding coupon use that can be hard to ignore, but realistically, it’s free money on the table – why not pick it up? Your financial goals are important, so if you’re interested in couponing, don’t let the perceptions of others keep you from taking advantage.
In fact, households with an income of $100,000+ are twice as likely to use coupons than those who live below the average family income line. So, if you’re looking for a smart and simple way to reduce food expenses, coupons are the way to go.
If you primarily purchase name brand food items, consider making the switch to the generic alternatives. In many cases, there’s no difference between name brand and generic products aside from the price and packaging. Some of them are even made in the same facility!
With that said, generic products won’t always be cheaper, and there are cases when a name brand product is far superior to the generic version. Use your best judgment when making these calls, and you could save more money on groceries than you anticipated.
How to save money while shopping for necessities
You can save a decent amount of money by cutting wants out of your budget, but what happens when it comes to purchasing necessities? Keep reading to learn a few tips on how to save money while buying the things you need.
Online marketplaces have made it easier to find just about anything you need at a reduced price. Before purchasing that new appliance from the store, take a look online – someone in your area could be selling it much cheaper.
Popular online marketplaces to check out:
Use cash instead of your credit card
Research has shown that people are much more likely to spend greater amounts of money (up to 100% more) while using a credit card than while using cash. Think about it – when you count up your hard-earned dollars and hand them to a cashier, you’re consciously aware of every cent you’re spending. With a credit card, a quick swipe is all it takes – you see the number on the screen, but it’s a price that can be paid at a later date.
There’s less of an emotional impact when paying with credit cards, which is why it can be easier to spend more while using one. If you’re trying to reduce expenses, going on an all-cash diet could be an exercise worth trying. You may find that you’re willing to opt for cheaper alternatives or spend more time comparing prices.
Institute a 24-hour waiting period before making a purchase
If you’ve struggled with impulsive shopping before, it can be difficult to clearly define the boundary between “wants” and “needs”. When you’re on the fence about a purchase, give yourself 24 hours to think about how much you really need it. If after 24 hours you’re certain it’s a necessary purchase, go for it – if not, you just successfully curbed some unnecessary spending.
For more expensive items, it could be wise to take up to a week to make a decision. The greater the cost, the greater consideration you should give the purchase.
Ways to save money on bills
Bills, bills, bills. The money we make never seems to stay in our pockets too long, eh? Fortunately, you still have options when it comes to saving on your monthly bills. Continue reading to learn how you can save money on your cable, internet, utilities, and credit card bills.
Downgrade your cable plan, or nix it completely
Today, more and more people are cutting the cord and going without cable. With the low cost of streaming services today, you can save a boatload by moving forward with one or two of them instead (as long as it’s in your entertainment budget.)
If you’d prefer to keep cable but want some ideas on how to lower your bill, you can try:
- Downgrading to a cheaper plan without premium channels
- Keeping a cable box in one room and returning the cable boxes you don’t use as frequently
- Switching to a more affordable cable provider
- Giving your provider a call and negotiating a lower rate
Review your internet and smartphone plans
Internet and smartphones, unlike cable, are essentially a necessity these days – but you can take the same suggestions we listed above to save money on these expenses as well. Try downgrading to a more affordable internet or smartphone plan, switch to a cheaper provider, and/or give them a call and try your best to negotiate your rate.
If you’re up for it, you could always consider reverting back to a “dumb phone” to save even more money. Phones that only have text and call functionality are extremely affordable, often costing less than $100.
Use your utilities conservatively
While using your utilities conservatively won’t save you a ton of money right off the bat, you could end up saving a decent sum of money over time.
Try out these suggestions to save money on your utilities:
- Cut your shower time in half (if you generally take long showers)
- Unplug appliances and devices while they’re not in use
- Turn off lights when you’re not in the room
- Air dry your clothes rather than use your dryer
- Only use heat and A/C when necessary
Consolidate credit card debt with a personal loan
If costly credit card payments are taking up a good chunk of your budget, you could reduce your monthly payments significantly by refinancing with a Best Egg personal loan. To learn more about how you could save money on interest, consolidate multiple payments into one easy monthly payment, and say goodbye to credit card debt once and for all, click here.
By following these simple tips, you should be able to reduce your monthly expenses in no time. So, go write down your list of financial goals and get cracking on that budget! We’re wishing you the best of luck.
This article is for educational purposes only and is not intended to provide financial, tax or legal advice. You should consult a professional for specific advice. Best Egg is not responsible for the information contained in third-party sites cited or hyperlinked in this article. Best Egg is not responsible for, and does not provide or endorse third party products, services or other third-party content.