With the hard economic times roaming on our doorsteps each passing day, learning how to drastically cut expenses is vital. Take a look at these few tips to see how you can do it.
How to Drastically Cut Expenses – 12 Proven Methods
A report published in 2017 by CareerBuilder, an employment website, indicated that almost 78% of Americans are living one paycheck to the other. These financial statistics are a clear indication of how much people need to learn new ways of managing their expenses.
So, if you fall under this population group, or are just looking to reduce the amount you spend every month, then you are in the right place. Today we’ll try to explore some of the most effective ways you can use to make sure that you don’t go overboard with your expenses.
This article will show you just how to drastically cut expenses without compromising the quality of your life.
And, although you may not be in the category of people living on one paycheck to the other, learning these incredible tips can have a significant effect on your finances.
Managing your cash flows and expenses is never easy.
But, with apps like the Personal Capital app, all these hassles can be history. The app helps you to manage your accounts, transactions, and keep you up to date with your net worth.
If you want to learn how I use the app, follow my step by step guide on how to use Personal Capital for budgeting.
Table of Contents
Cutting Everyday Expenses
Here are 12 methods you can use to reduce your skyrocketing daily expenses and save money.
Reduce Transportation Expenses
Transportation is one expense that takes a heavy toll on our income without us realizing it. Right from the fuel cost, to depreciation, insurance, and every other maintenance cost, cars can considerably drain your income.
Based on all the costs that come with owning a car, AAA estimates that it will cost you over $8,600 annually to maintain that car. This is exclusive of the daily parking fees.
But how do you minimize these costs?
Start Using Public Transport
For those who can access public transportation, this is the first and easiest way to save on your transport costs.
For instance, this mode of transportation saves you on expenses such as:
- Gas money
- Parking fee
- Maintenance (primarily due to wear and tear)
This means that each time you leave your car at home, you are cutting down on your monthly expenses. Better still, if you can forego that car altogether, the more money you can save.
With the emergence of multiple Rideshare services such as Uber and Lyft, living a car-free life isn’t hard anymore.
You can use public transportation to go to work and rent a car for other vital functions such as road trips, night out, or any other occasion.
This can help you save significant amounts of money.
See Related: Best Apps Like Uber
Rent or Sell Your Vehicle
If you own a car and you rarely use it, renting it out or selling it, can be an incredible tactic of cutting expenses to the bone.
First, with apps like Getaround, you can rent out your car and make some extra money, whenever you are not using it.
This income can be used to cater to some expenses like maintenance and gas when you want to use the car. Also, instead of incurring all the costs that accompany owning a car, you can decide to sell it all together.
This way, you’ll be saving on insurance, maintenance, as well as depreciation.
The money can be put into a better use like an investment, which is a positive path towards financial freedom.
Carpooling to Work
For those who can’t survive without the car, there’s still a way for you to save. For instance, carpooling at work is an ideal strategy.
This means that you find some people to be sharing your car with, to, and from work. If you are using your vehicle, you will save on gas, while if you share someone else’s ride, you’ll save on maintenance and gas.
Also, you get to enjoy the benefits of carpooling lanes, which can make getting to work and home easier for you.
Moderate Entertainment and Subscription Expenses
Another area that takes up a lot of our income is entertainment. Various entertainment expenditures can create big holes in our revenues and thus the need to regulate it.
Some of the things you can do here include:
Cancel Club Memberships
Want to lower your monthly expenses? Some of these memberships must go. For instance, how frequently do you use your gym or local country club membership?
Well, if these memberships are just lying there to make you feel good, then you are wasting your money. If you go to that gym once or less in a week or visit that country club less than once in a month, then you might want to consider letting it go.
By canceling your gym membership, you can save an average of $600 annually, and use this money for something better. Luckily, there are multiple other ways for you to keep fit without that gym membership.
- Working out from home
- Long walks and hike – Make it easier with apps that pay you to walk
These methods will ensure that you save money without compromising your fitness and health.
See Related: Important Life Insurance Questions to Ask
Reduce or Terminate Your Cable Bills
Are you aware that an average American household spends around $103 monthly on cable TV? Well, this is the hard fact that we must live with. Reducing or entirely cutting out your cable bill can have a significant change in your expenses.
The good thing here is that you can still have cheaper access to your favorite shows. For example, instead of paying for a premium cable, you can downgrade to a basic one.
You can also cut the cable completely, which will have multiple advantages. For one, you will reduce your TV hours and use that time for something else more productive.
Secondly, reduced watching time means lower electricity bills.
So, if you are looking for ideal methods of how to drastically cut expenses in your home, cutting cable subscriptions is a perfect start.
Cheaper options to cable TV include:
- Netflix at $8 to $12 monthly
- YouTube – Free
- Amazon Prime at $8.99 per month
Use a free app like Trim to identify where your bills are too high. You can use it to find high cable bills, unused subscriptions and so much more. You’ll start saving money in no time.
See Related: 12 Sites That Give You Money
Identify Cheaper Entertainment Options
Taking advantage of local libraries, or attending community events such as art fairs and musical festivals, are perfect entertainment options. Also, joining local volunteer groups can present an incredible alternative to expensive entertainment.
There are also numerous free things you can do online for entertainment. From making new friends to reading incredible books, the internet is a hub of free and cheap entertainment.
Also, you can easily get nice books to read through the mail, which can supplement your online books.
Reduce Your Travel Expenses
As I’m a big fan of traveling, I know that this can be quite a money pit. People spend thousands of dollars on travel every year.
However, I found better ways to continue traveling but incur fewer costs. Some of the things you can change include:
- Use budget airlines
- Book tickets in advance
- Use Airbnb to find cheaper accommodation
- Sleep in hostels instead of expensive hotels
These and more can help lower your travel expenses significantly.
Cut Your Internet and Cell Phone Bills
Here in the US, an average household spends around $67 monthly on the internet. On the other hand, an average smartphone user incurs a cell phone bill of about $80 every month.
These two combined add up to an annual expenditure of around $1,764 only on internet and cell phone bills.
And, since, in most instances, the average user will not fully utilize their monthly data plan, it’s’s wise to find a way to reduce your spending. You can do this by contacting your internet provider, and negotiate for a better rate that matches your usage.
If not that, you can subscribe to a lower plan. To help you reduce cable/phone expenses, try using the Trim app. The app helps you to identify ways to reduce your bills, as well as to negotiate for lower rates.
See Related: 8 Easy Ways to Convert Visa Gift Cards to Cash
Cut Your Food and Shopping Expenses
Reduce Your Food Expenses
Reducing the amount you use daily on food can be a great way of cutting everyday expenses. Since an average household in the US spends around $7,000 on food, this is an area that needs consideration.
Budgeting for food can be the best way to ensure that you don’t go overboard with your expenditures.
But how do you save on food?
These tips will show you just how:
Before you go shopping for your foodstuff, it’s’s prudent to compare prices. This way, you go armed with full information on what item to buy where and at what price.
Fortunately, apps like Rakuten will assist you in controlling your household expenses.
Rakuten will even give you a $10 bonus simply for signing up.
Use Cashback Apps
Whenever you dine out, you stand a chance to receive cashback for every bill you pay. It’s’s like getting paid to eat.
An app like Dosh allows you to get a cashback of up to 10% on your bill. This happens when you dine in over 1000 restaurants they partner with. And, unlike many cashback apps, this one deposits hard cash into your Dosh wallet.
Another great app here is Drop. Although it rewards you in points, you can still redeem these points as gift cards for popular retailers like Amazon and Walmart.
When you are shopping for your foodstuff, these are incredible cashback apps that help you to save money.
Cutting on Shopping Expenses
When it comes to shopping, not many people can regulate their spending. And, when trying to identify methods of how to drastically cut expenses, shopping can’t be ignored.
Especially when you have a tight budget, a shopping plan is necessary to ensure that you don’t deviate from your purpose. Also, if you want to save more when shopping, you can register for various apps that reward you for shopping.
For example, Rakuten is an ideal app that can help you save on your grocery expenses. The app rewards you whenever you do your shopping at your favorite outlets.
You can redeem your points in cash through PayPal, check, or in-store deals. With this app, you have a chance to pay less due to the discounted prices.
If you are shopping online, the Honey app can help you save awesome cash. The app enables you to identify the best discount codes on the internet.
And, whether you’re buying clothes, ordering a pizza, or booking a travel ticket, the app ensures that you don’t pay more. Join the app for free and enjoy saving money.
You can also try out the Ibotta app to save on your shopping. It is also a cashback app that gets back some of the money you’ve spent shopping, into your wallet.
Use one of these income and expense trackers to save money and monitor your spending.
Save on Rent or Mortgages
One way to reduce your rent is to move to a cheaper house. This way, the monthly amount that goes to rent goes down.
However, sometimes this is not an option due to multiple factors such as proximity to work or your kids” school.
If this is the case, how do you lower your rent? If you have an extra room, you can look for a roommate or rent out that space to travelers.
Fortunately, there are platforms like Airbnb, which makes the renting process easier. Just register on their website, and advertise your extra room, putting all information, including price, amenities, and location.
This can be an excellent way to either find a roommate or an interested traveler looking for accommodation. With the money made, you can chip in into paying your rent or mortgage.
See Related: 5 Steps to Effective Budget Monitoring
Make Extra Money
Instead of only thinking of how to save the little that you have, why not make even more money. There are numerous money-making opportunities available for you both online and offline.
For example, an app like Swagbucks offers you a chance to make money by completing simple tasks.
You can earn yourself free gift cards through:
These gift cards are redeemable in various retail stores like Walmart and Amazon. And, you can use the gift cards to buy almost anything in accepted stores.
While survey sites won’t help you get rich overnight, sites like Opinion Outpost will give you a bonus for signing up and you can earn small amounts of cash that will help you reduce debt or invest faster.
Conclusion on How to Drastically Cut Expenses
Cutting down your monthly expenses doesn’t have to be that hard. With the above methods, you can significantly reduce costs and save money to invest or cater to some other needs.
I hope that with this article, you are now equipped with tactics on how to drastically cut expenses in your home. Spend less, invest more and attain financial freedom.
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