man at grocery store learning to cut expenses
Budgeting & Saving

How to cut expenses key takeaways

  • Always shop with a list to cut down on impulse buying.
  • Mobile apps paired with rewards credit cards could help you save money.
  • Paying off debt helps you save on interest charges and frees up money for other purposes.

When it comes to cutting expenses, it’s not how much you make, but how much you keep that counts. The more you keep, the faster you could pay off debt or build up an emergency fund.

Spending efficiently doesn’t mean you can’t enjoy a movie or visit your favorite restaurant—it just means you cut expenses that aren’t necessary. Expenses that don’t add true value to your life, and only reduce your overall cash flow. In this article we’ll review many ways to cut expenses, helping you save money for those things you really need.

Here’s a look at some simple ways to cut expenses and save more money.

1. Use a budget

Making and sticking to a monthly budget is a good way to cut costs. Some view budgets as too restraining, but they can actually be liberating. A budget frees more money because it keeps spending habits under control. Whether you budget on paper or with a mobile app, you’ll plan monthly expenses based on your income, expenses, and lifestyle.

A specific food budgetoften helps cut expenses even more by reducing the tendency to buy spur-of-the-moment items. Never shop hungry, and always shop with a budget in mind—no matter what you’re shopping for.

2. Track spending

One of the best ways to cut expenses is by tracking your spending. Tracking cuts down on “unmindful” spending. Keep a spending log, whether on a pocket notepad, in phone notes, or by using a budgeting app. Then you’ll know where every penny you spend really goes.

Let’s say that every day you spend $5 for coffee, $2 for soda, and $1 for some candy. You know, all those little unnoticeable things you spend money on every day. It becomes a lot more noticeable when you add it up: $240 a month. Tracking your spending allows you to account for everything spent. And there’s a bonus: It also makes you think about those expenses before the money is gone.

3. Utilities

If your monthly payment for electricity, gas, or water varies seasonally, look into what utilities call a “budget plan.” If your utility company offers a budget plan, and many do, they’ll average your bills based on past usage. That way you’ll know exactly how much you’ll have to pay each month.

To save more, lower your water heater thermostat. Many come set to 140 degrees, although 130 degrees will feel just as hot. You can also bump up your house thermostat a degree or two in the summer. Likewise, lower it a degree or two in the winter. A 1-degree change could save between 1 to 3% on energy costs. LED lights use less electricity than other options, so install them everywhere you can. And seal up those pesky leaks around your windows and doors. You could save wear and tear on your heating and cooling system by treating only the air inside your home.

4. Eat at home

Do you buy a lunch or dinner every day, or every workday? If so, you could save big by eating at home instead. The average cost for a fast-food meal runs about $8, inexpensive sit-down restaurant meals average $15. But an average homemade meal only costs $4 to make. If once a week you made a lunch to take to work, you’re already saving $208 to $572 a year.

Going out to eat with friends or family, even if you’re only paying for yourself, gets expensive, too. Instead, why not invite everyone over for a dinner party, potluck style? It’s a good way to save, and the savings might be substantial. Or order some takeout food. It’s not as money-saving as a potluck, but it’s usually less expensive than eating out.

5. Shop with a list

Use a pad of paper or a mobile app to maintain a shopping list and stick to it. This applies to any and every kind of shopping: food, clothes, shoes, hardware, gardening. Impulse buying isn’t allowed. When the need to make impulse purchases hits you, add those items to your shopping list. But don’t buy them right away. Wait until the next time you go shopping. If the desire is still there, you might make the purchase then.

6. Reusable items

Buying reusable items is a good way to save. Refilling a reusable plastic or metal bottle, as you need it, will reduce expenses. Bringing coffee or tea from home, in an insulated container, saves money—and time spent in line. Fabric napkins and cloth towels easily replace paper, throw-away ones. Skip the plastic bag and put your lunch or snacks in a washable container.

7. Cash-back apps and rewards programs

With a rewards credit card, you could earn some extra cash back on your purchases. Some cards give you 1% to 3% in rewards for any purchase. Sometimes, monthly promotional offers give you even more, like 5% on gas or groceries. Just make sure to pay off those purchases every month so you don’t need to make additional interest payments.

Some mobile apps let you upload your receipt, activate online offers that get you cash back, or provide discount coupons. If you don’t mind sharing your purchase history, you could earn a small amount for many purchases you make.

8. Buy used

Thrift stores are a great place to find used items. Check online sources, like Craigslist, OfferUp, and Facebook Marketplace. If you need something fancy, there are resale stores that even specialize in used wedding and party attire. Furniture, appliances, and housewares cost much less if bought used.

If you don’t really need to own something, could you rent it? If you only pressure wash your house once every few years, it might be cheaper to rent than buy. Many big-ticket tools see only occasional use by the average homeowner. Consider renting if you don’t need to have a specific tool on-hand all the time.

9. Pay cash

Freeze your credit cards, either financially or physically. Locking your card through your issuer adds another step you need to go through before using it. Freezing your card in a block of ice is a more extreme control method. But it works to reduce impulse spending.

Paying cash is the ultimate form of budgeting. There’s no overspending, because when you run out of money, that’s it. For some folks, the most helpful approach to curb their overall spending is to pay cash.

10. Pay off debt

Debt payments are a big load on most budgets. Instead of taking an expensive trip this year, or buying a new car, consider paying off your debt. You’ll save on future interest payments. Credit card bills will be lower, adding to your budgeted income.

If you can’t pay off everything right away, consider refinancing debt or speak to a nonprofit credit counseling agency. You may be able to consolidate debt by rolling credit card debt into a new loan with lower interest rates. Make sure any fees or charges don’t offset your savings.

11. Do it yourself

Do you have time to do a simple home improvement project and save a few bucks? You don’t have to be a master carpenter to fix a loose board or tighten loose chair legs. There are videos online for fixing almost everything, from cars to toilets. But stay within your limits and know your skillset.

And don’t forget about the easiest DIY projects: making your own coffee, smoothies, meals, and packed lunches. A meal plan from a store or online vendor could also help reduce spending. They deliver the food and fixings, you cook and serve future meals—and pocket more money in the long run.

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.

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