10 Ways to Reduce Expenses

Ways to reduce expenses include cutting costs on major expenses like housing and transportation, lowering recurring payments such as utilities and insurance, and adopting smart financial habits like budgeting. Trimming your spending is often the first step toward major financial goals, whether it’s saving for a home or paying off credit card debt—and it’s a skill you’ll use repeatedly.

However, cutting back doesn’t mean eliminating all the things you enjoy, like travel and entertainment. In many cases, you can negotiate lower rates on services you use regularly or find discounts to make them more affordable.

Here are 10 practical ways to cut costs, both big and small.

1. Track Your Spending for a Few Months

Gaining insight into where your money goes can be a powerful motivator for making meaningful financial changes. Tracking your spending allows you to identify patterns and areas for improvement. If your online banking doesn’t categorize expenses for you, consider reviewing your bank and credit card statements and sorting expenses into categories manually.

You can track your spending using a spreadsheet or automate the process with a budgeting app. For a clearer picture of your habits, monitor your expenses for more than a month to account for any irregular spending patterns.

2. Pick a Budgeting Method

Using the insights gained from tracking your expenses, the next step is to select a budgeting method and adjust your spending as needed. Two popular and simple budgeting approaches include:

• The 50/30/20 Rule – Allocating 50% of your income to necessities, 30% to wants, and 20% to savings and debt repayment.
• The Pay Yourself First Method – Prioritizing savings by setting aside money for your financial goals first, then using the remaining funds for expenses.

Choosing a budgeting strategy that aligns with your lifestyle will help you manage your money more effectively and stay on track toward your financial goals.

3. Cancel Unnecessary Subscriptions

As you review your expenses and financial goals, one of the first adjustments to make is canceling any subscriptions or memberships you don’t use regularly. These automatic payments can easily go unnoticed, preventing you from assessing whether the service or product is truly valuable to you. By eliminating unnecessary memberships, you can free up a considerable amount of money in your budget over time.

4. Look for Discounts

In addition to canceling subscriptions, you can also save money by looking for discounts. Keep an eye out for promotional deals and reach out to the company to ask if they can offer you the promotional rate, this is often more effective if you’re considering canceling. Alternatively, look for service bundles, such as getting a free streaming subscription when you sign up for a specific cellphone plan. Many services, like Spotify, also offer family plans that can help you save.

5. Shop With Cash Back Apps and Browser Extensions

In addition to subscriptions, you can save on one-time purchases, both in stores and online, by using cashback apps or browser extensions that find coupons or compare prices for you. Although these programs may take some time to set up and learn, it’s worth using them at stores where you shop regularly and can get the most savings.

6. Use a Cash Back Credit Card for Certain Spending Categories

Alternatively, or in addition to cash back apps and browser extensions, using cash back credit cards can help you save money on everyday expenses like groceries and gas. Some cards offer a flat cash back rate, such as 2%, on all or certain purchases, while others feature rotating categories that give cash back on specific types of spending each quarter. You can usually redeem your earned cash back as a credit toward your card balance or request it as cash via check or bank transfer.

7. Negotiate Your Bills

You can often negotiate lower monthly bills directly with your service provider or through third-party services like Experian BillFixer™. For instance, utility bills, car insurance premiums, and credit card interest rates may all be negotiable. You can also check with your cellphone provider to see if they offer new plans that better suit your needs since you first signed up. If you’re using more data than you need, consider switching to a prepaid plan or downgrading to a plan with less data for a lower monthly cost.

8. Make Use of Employee Benefits

If it’s been a while since you reviewed your workplace’s employee benefits, now is a great time to ask HR for an updated list. You can save money by taking advantage of benefits like gym membership subsidies, free workout classes, transit discounts for your commute, and student loan repayment assistance.

9. Consider Cutting Housing and Transit Costs

To significantly impact your finances, consider reducing your housing or transportation costs. While this may require more effort, it can lead to substantial savings. If downsizing your home isn’t an option, think about renting out an extra room, even just for one weekend a month, to generate passive income. Another option is purchasing a used car instead of a new one, or you could rent out a parking spot or an unused car, either regularly or occasionally, through apps like SpotHero and Turo.

10. Use Meal Planning to Reduce Grocery Bills

Meal prepping is a great way to save money on groceries by minimizing food waste. You’ll plan your meals for the week, prepare them in advance, perhaps with a Sunday cooking session, and store them in the fridge or freezer. Investing in kitchen tools like a slow cooker, which allows you to make meals in bulk, can reduce your overall expenses. Plus, meal prepping eliminates the stress of last-minute grocery store runs on busy evenings since your meals will already be ready to go.

Conclusion

Cutting expenses can involve finding quick solutions or making intentional lifestyle changes. However, every dollar saved brings you one step closer to achieving your financial goals. Consider directing your savings into an emergency fund, retirement account, or paying off debt to maximize the impact of your efforts.