How to Drastically Cut Your Expenses
If you’re wanting to learn how to drastically cut expenses, you’re not alone. A lot of people struggle with finances one way or the other. Even several surveys reveal that many Americans are living the paycheck-to-paycheck lifestyle.
My husband and I were in the same boat too for many years living on a small single income, and more so when he decided to quit his job. At the time, we had to seriously learn ways on how to drastically cut our expenses to survive.
Indeed, desperate times call for desperate measures. And it has since become a habit of mine to discover new money saving tips and tricks. I’ve even compiled my most favorite frugal living tips in this post.
Learning how to cut your expenses can be a lifesaver. We never know what the future holds so it’s better that we prepare ourselves financially and learn ways on how to live below our means.
Now, if you’ve done your best coming up with extra income and still find getting ends meet, here are some expenses that you can reduce or eliminate so that you can free up a high amount as possible.
9 Ways on How to Drastically Cut Expenses
1. Cook food at home
According to studies, food makes up 10% of expenses among American families. On average, Americans spend around $8,000 on food each year. If you can reduce the amount of food you eat, without sacrificing quality and nutrition, you will be able to save a significant amount of money.
We save a lot of money by cooking more food at home. Homemade meals are more practical and healthier than restaurant- or fast-food dishes. Moreover, you have control over the portion, amount, and type of ingredients you put in each meal.
Additionally, you can drastically save more money by bringing your own lunch at work. Instead of eating at the cafeteria or restaurant every day for lunch, you can pack your own lunch instead and save a couple of dollars. In fact, if you plan your meals properly, you can make a fast and easy lunch from last night’s leftovers.
2. Plan your meals
As I’ve already mentioned above, cooking your own meals at home is a huge budget-saver. But, you can maximize your savings by planning your meals.
Planning your meals helps you determine each dish you have to prepare for the rest of the week. This helps you save time on prepping and cooking (time is money, folks). Additionally, you can curate meals based on what you have at hand in the kitchen or what’s in season. You can also cook meals in batches so you can just grab a portion and reheat when you’re about to eat.
If you’re not planning your meals right now, I suggest you give it a shot. It’s a life-changing routine that can save your budget and sanity.
3. Cut the cable
If you’re still using the cable, chances are, you’re paying around $1,500 for it per year.
We ditched cable over 5 years ago and have been saving at least $800 per year! Instead of cable, we use low-cost alternatives such as Netflix at $18/month for a premium plan or Amazon Prime for $13/month. If you want to watch for free, there’s always YouTube. The best thing about these alternatives is that you have the option to freeze or cancel your subscription at any time.
4. Find cheaper internet and phone plans
Are you really using up all the calls, text and data that come with your current internet and phone plan? Chances are, you’re not. And that means you’re wasting money.
Unfortunately, cutting them off from our lives entirely is not always an option. But why pay a high cost when you could have them lowered? Consider calling your service provider and see if you’re eligible for discounts. If you’re not one to negotiate, you can use services like Trim to do the bargaining for you.
If all else fails, jump ship. You could probably find other service providers that offer lower rates.
5. Use only one car
Having two cars is convenient, especially for families. But face it: it’s also expensive. Look at the cost of maintenance and repairs, insurance, fuel, and parking fees. They all add up!
If you want to drastically cut your expenses by a couple of hundred dollars each month, ditch the second car and use only one car. Sure, it needs some adjustments to make it work, but it isn’t so bad once you’ve had the hang of it. You can address your car-less situation by going for a walk, riding a bike, taking public transport and carpooling. It’s healthier, cheaper and better for the environment.
6. Negotiate insurances/plans
Insurances are some of the bills people pay for without batting an eye. You know you need them, so you pay for them no matter what the cost. But if you look closely, you could have enjoyed having insurance, but at a lower price.
Even if you’re already happy with your current coverage, it pays to shop around for the best policies every year. Who knows, you might find another provider with a lot more to offer. You should also inspect your policy when you have major changes in life, such as marriage, a change of location or residence. Such things can impact the cost and coverage of your insurance.
Finally, negotiate your rates. Reach out to your insurer and see which discounts might be applicable to you. For instance, bundling two or more policies from one company can lower your rate. For car insurance, you can ask to lower your premiums if you’ve been a safe driver in the last few years or if you’ve installed updated security features into your vehicle.
7. Get rid of unused memberships
Memberships are well and good as long as you can maximize them. Otherwise, you’re just wasting money. Have you really been reading all the magazines you were subscribed to? Did you really go to the gym regularly? If you say no or maybe, then it’s high time to terminate these memberships.
When you come to think of it, you might not really need these subscriptions after all. Many people have gym memberships but rarely exercise at the gym. You can do your own workout at home following YouTube videos, or you can run, walk, do pilates and yoga. There are cheaper, even zero-cost alternatives, to expensive memberships and subscription. Cutting them off would save you a couple of dollars each month.
8. Downsize your home
I understand that not everyone has this option, especially among families, but there are people who can truly benefit in downsizing their homes.
When you come to think of it, a large home can cost a lot of money. It’s more expensive to run, you have more cleaning to do, the power and water consumption are higher, and even the property insurance cost a lot too. Well, these are on top of the mortgage or rent of course. Doing the math, bigger home equals more expenses.
Opting for a smaller home can make way for some significant savings.
If you can’t find cheaper housing, you can still cut costs by renting out your spare rooms or finding a roommate.
9. Do a spending freeze
Perhaps the most effective way to cut down on spending is to stop spending.
It takes some discipline and restraint to do a spending freeze, but being successful in this endeavour will let you realize a couple of things. First, you can survive with just the basics. You can live without buying something new. Second, you learn delayed gratification. You get to appreciate the things that truly matter. Finally, you feel a good amount of peace and freedom knowing you have money.
If you’re new to the spending freeze, you can start low and slow. For instance, you can challenge yourself to not spend on wants for the rest of the month. Some people do a spending freeze in October to save up money for the holidays. You can set your own rules, but the bottom line is to not spend any money beyond the necessities.
I am sure that we can all agree that building wealth can happen in two ways: one is to earn more, and the other is to save more. It would be amazing if you could do both as that can significantly boost your income. However, if you are bent on saving more from the money that you already have, it’s wise to look at big-ticket expenses and find ways to bring them down. Aiming to save a dollar here and there isn’t that bad. But if you need to free up a significant amount in your budget, then you must take drastic action.
How are you reducing expenses in your household? Let’s connect in the comments.