It seems like everyone is trying to figure out how to cut expenses these days. But although it might feel like you’re the only one struggling to make ends meet, trust me, you’re not alone. There’s a good chance that someone in your own life is quietly feeling the pressure, too.
So take a deep breath—we’re going to explore how to cut expenses in practical, manageable ways that won’t leave you feeling deprived.
Learn the Basics of Expenses
First things first, know that you’re taking a step in the right direction just by being here. This shows you’re ready to take control of your money and make wise choices to reach your money goals since that’s the goal of my blog—to help you have more time while you’re earning more. And how I wish I had someone to teach me the ways when I was financially struggling.
This won’t happen overnight, though. It’s about making gradual adjustments that add up to big savings over time. So get comfy, and let’s dive into the details.
1. Know Where Your Money Is Going
According to CNBC, 74% of Americans feel stressed about their finances. Maybe one reason for that is not knowing where their money is going.
Understanding exactly how you spend your money is the foundation of cutting living expenses. It can be intimidating to really face your spending habits, but it’s also super empowering. Many people are surprised to discover just how much those small, everyday purchases add up.
The best way to figure this out is by tracking your spending for a month or two. Keep a running tally, use a budgeting app, or check your credit card and bank statements.
Once you know how you spend your money, break down your expenses into a couple of categories.
Essential: These are the “non-negotiables” like your rent, mortgage, utilities, groceries, and transportation.
Discretionary: These are the things you enjoy and choose to spend money on, such as dining out, entertainment, hobbies, and clothes. These expenses are often easier to cut back on if needed.
I recommend putting all of this in a table. A visual overview can really help to bring those numbers into focus. That way, you can quickly identify what your big purchase is that’s increasing your financial stress.
Remember, don’t judge yourself—just get a clear picture of where your hard-earned cash is headed each month to know your financial habits.
It’s hard to fix what you don’t know is broken, right? And you’re allowed to splurge on some things that bring you happiness. It’s just about finding a sustainable balance through financial planning.
2. Budget With a Twist: The 50-30-20 Rule
Once you have a good handle on your spending habits, it’s time to introduce the game-changer, which is a budget.
Many financial experts swear by a 50-30-20 breakdown.
What that looks like is using 50% of your take-home pay for your essentials, 30% for your “wants,” and dedicating that remaining 20% for savings options and debt repayment.
But for those who find it hard to track every little cent or prefer a bit more flexibility, try setting up a few separate bank accounts that let you save big for mortgage payments, brokerage accounts, savings accounts, and others.
How do separate bank accounts help, you may ask?
Think about having three accounts: a “Bills” account for the essentials, a “Fun Money” account for the good stuff, and a “Savings” account where you can automatically send 20% of each paycheck. A savings account is an effective debt management tool.
This visual separation takes so much of the guesswork out of sticking to your budget and really minimizes your spending stress. Seeing your “Fun Money” dwindling also acts as a built-in warning system to help you scale back your discretionary spending throughout the month.
How to Cut Expenses in Simple and Effective Ways
Now, for the real fun of reducing expenses, you can choose from any of our tips below. What’s important is to not skip on the basics above because without knowing your cash flow, you may find it hard to save money and, worse, pay off that student loan or credit card debt.
You can’t just simply say that you can cancel unnecessary expenses without knowing where you’re spending your money, right? In short, you may not even decide what the most suitable way of cutting expenses is if you don’t have a budget.
Once you set up your budget, it’s time to consider these ways on how to cut expenses so that you can start settling your credit card debt, paying off your student loan, or increasing your credit score.
1. Embrace the Power of No (Thanks, but I’ll Pass)
This is where things get real. You’ve made your budget, you see where your money is going, but now you need to make cuts. It’s time to embrace the power of “no.”
It’s like building a muscle. At first, it’s tough. But the more you use it, the easier it gets.
That daily coffee habit? Think about cutting back to twice a week and making your coffee at home the other days.
That gym membership you never use? Cancel it and find free workout routines online. Those subscription boxes that are piling up? Pick one you really love and cancel the unnecessary ones. You got this.
You should also think about your spending triggers.
Is it stress shopping that leads you to buy expensive stuff that will just get stuck in the corner of your wardrobe? Boredom, maybe?
Once you know what pushes you to spend, you can find new ways to cope. Maybe a walk in nature or a phone call with a friend. You might be surprised how much you can save (and how much better you feel) by simply saying “no” to unnecessary expenses.
This isn’t about deprivation; it’s about making choices that align with your bigger goals.
2. Groceries Get Real
You gotta eat, right? But man, grocery shopping is a budget buster.
It doesn’t have to be that way. Let’s get serious about saving on groceries.
First things first: meal planning is your new best friend.
Plan your meals for the week before you go to the store so you only buy what you need. We’ve all been guilty of tossing out wilted lettuce and that weird jar of olives we swore we’d eat. No more!
Next up, coupons!
Yes, they still exist, and they can save you a surprising amount of money. Check out online coupon sites, browse the Sunday paper, and download your grocery store’s app for digital coupons. You’d be surprised what deals you can find.
Most importantly, don’t be afraid to buy generic brands.
Seriously, a lot of times, they’re just as good as the name brands but way cheaper. This goes for everything from cereal to spices to cleaning supplies. Your taste buds (and your wallet) will thank you.
3. Plan Like a Champ
Want to know a secret to cutting expenses and saving more money? It’s planning. It might not sound super exciting, but trust me, it makes a significant difference in how to cut expenses.
Think of it like this: if you were going on a road trip, you wouldn’t just hop in the car and start driving without a map or a destination in mind, right? The same goes for your money.
Although we’ve discussed the 50-30-20 rule in budgeting, here, let’s emphasize setting up some financial goals in your budget. Don’t worry, it doesn’t have to be complicated. You can find plenty of free budget templates online or even just use a simple spreadsheet.
Having goals gives you something to work towards and helps you stay motivated. Do you want to save up for a down payment on real estate? Pay off student loan or credit card debt? Build an emergency fund to avoid availing of personal loans?
Whatever your goals are, write them down and make a plan for how you’re going to achieve them. Having a clear plan makes it much more likely that you’ll actually reach your goals. Plus, it’s super satisfying to check things off your list as you make progress!
But what does your goal have to do with learning how to cut expenses? Well, if you have specific goals, you can easily say no to unnecessary expenses or subscriptions. Your financial goals can help you remember that those subscriptions can give you extra cash.
Count how much that extra cash is, and you’ll see how you can save big by avoiding unnecessary expenses.
4. Use Credit Cards Wisely
You might be surprised to learn this, but credit cards can actually help you save money. But you need to be careful. Credit cards can also lead to more spending and debt if you’re not careful.
If you pay off your balance every month, then you can use them to your advantage. Many offer rewards programs where you can get cash back or points. Some credit cards even give you extra points for certain purchases like gas or groceries.
But it’s important to remember to use credit cards responsibly. If you don’t pay your balance in full every month, you’ll get hit with high interest charges and a bad credit score. This can quickly wipe out any rewards you might earn.
So, if you’re looking to cut expenses, use a credit card for purchases to earn rewards that you can use. If you’re not comfortable using credit cards, that’s okay. There are plenty of other ways to save money.
5. Go Old-School with Entertainment
There are endless free or cheap things to keep you and your wallet feeling fulfilled. Think board game nights with friends, hitting the park for a good workout or peaceful walk in nature, catching free museum events, and taking advantage of your local library.
Your library even offers amazing online apps these days, making book borrowing a breeze.
These simple entertainments can help you save big rather than planning an out-of-town trip that can cost you much of your monthly earnings.
6. Cut Out Car Expenses (If possible)
Many cities throughout the country have amazing and affordable public transportation networks. I spent several months relying solely on public transportation and walking, and I ended up seeing more of my city than ever before.
Another nice little side benefit of choosing to get around on your own two feet is that I logged 10,000 steps most days—something I never accomplished back in my driving days.
And did you know that you can earn by walking? Use this to your advantage—hitting two birds with one stone!
But if walking isn’t for you, public transport can take a little adjustment at first, but I quickly began appreciating those “car-free” days.
FAQs
I can barely cover my current bills, how am I supposed to save anything?
When there seems to be no dollar to spare, making any adjustments can feel almost impossible. Start small by focusing on cutting those “discretionary” spending categories and slowly building momentum from there.
Think about canceling unnecessary subscriptions, embracing meatless meals once a week (which also has an awesome environmental bonus.), and pausing your daily Starbucks ritual. Every little bit saved can be redirected toward building a healthier financial foundation.
What are some non-essential expenses I can easily cut?
Some common examples that often add up to significant savings include dining out, subscriptions (especially streaming and those monthly beauty boxes), and pricey gym memberships (consider free or cheaper outdoor exercise options for now). You could also ditch cable and swap it for a more affordable streaming alternative.
What should I do with my extra money after I cut expenses?
Once you’re spending less, you can begin working on paying down debt (starting with those with higher interest rates). You can also build an emergency fund to buffer those inevitable life “surprises,” or begin saving towards goals (like travel or taking those career-boosting classes.).
Conclusion
Knowing how to cut expenses can often feel challenging. But those consistent, small shifts and embracing a mindset that focuses on long-term security over fleeting thrills will pay off in a major way.
Those choices might not bring as much short-term pleasure as a takeout dinner or an expensive gadget.
Remember that achieving those financial goals will bring about something even better—peace of mind, confidence, and that awesome feeling of paying off student loans and credit card debt. And if I can do it, trust me—so can you. You’ve got this.
