published 2022-09-05 13:00:00 2 How to Cut Expenses /content/thumbnails/p-27-how-to-cut-expenses-1-small.webp how-to-cut-expenses Whether you spend money on impulse buys, on conveniences, or to "keep up with the Joneses," - you are likely guilty of wasting money. Here are a few tips on avoiding wasting money on unnecessary purchases and saving for things that are truly important to you.

How to Cut Expenses

A hands gesturing that it refuses to pay.

Some people are more careful with finances than others, yet everyone wastes money. Whether you spend money on impulse buys, on conveniences, or to "keep up with the Joneses," - you are likely guilty of wasting money.

Here are a few tips on avoiding wasting money on unnecessary purchases and saving for things that are truly important to you.

Track Your Spending and Create a Budget

Finding out where your money is going will help you figure out where you can save. Tracking your spending habits for a month may be an eye-opener that shows where you need to make adjustments. Once you have a better understanding of where your money is going, you can easily cut those useless expenses. Creating a spending plan will help you waste less money on things you don't care about.

If you are already familiar with budgeting, you can skip directly to the tips.

To identify the areas where you overspend, start recording all cash purchases and checking your bank statements for everything you pay with a debit or credit card. When you have the list of all of your monthly expenditures, you will need to categorize them as needs, wants, and goals. Needs are the things you can't get by without. A place to live, utility bills, and food are examples of needs. Your wants are the things you buy for fun or leisure. And your goals are the things you want to achieve, such as paying off your debt, saving for a house, and building a solid retirement fund.

Everyone wants a nice place to live and nice things to have. But spending too much on your wants may prevent you from achieving your money goals. Wants and needs aren't the same for everyone. The line between them is often blurry. An apartment is a need but an apartment in a trendy neighborhood is a want. Food is a need but extravagant food and eating out is a want. Clothing is a need but designer clothing is a want. You get the idea. Placing your needs and goals first will help you decide what is necessary spending and what is not.

After you categorize each expenditure, you will see what expenses you can trim. Start trimming down your wants category until you are left only with the things that add true value to your life. You can also evaluate your needs category and see if you can make adjustments to save some money there.

You will end up with a list of expenses on things you absolutely need and really want. The list will also reveal the purchases that are a waste of money. This list will be your budget. You can use it to control your spending and eliminate useless and impulsive purchases from your future spending.

Learn more about budgeting: Budgeting 101: What is a Budget and How to Start Budgeting

Now, let's look at a few examples of wants and needs that you can adjust to save money.

Re-Evaluate Your Subscriptions and Memberships

List all subscriptions you have. Not just streaming services - everything you pay for regularly. It's easy to forget about recurring monthly bills, so you may need to check your budget if you made one, or review your bank statements. You may be surprised to learn how much you automatically pay each month without even using the service.

Cancel all subscriptions you have forgotten about. Re-evaluate each subscription and see if you want to keep it. There is a possibility that some subscriptions will not be as necessary as you thought they would be.

Cut Spending on Food

Take Your Own Lunch to Work

Consider making and packing your lunch rather than buying it every day. Yes, it's a chore. But it could save you a significant amount of money. Spending $10-$20 a day doesn't sound like too much for convenience, but this daily spend translates to hundreds a month. Over a year, the convenience of buying lunch can cost you $2,000-$5,000. A packed lunch that costs a few dollars can save you thousands a year.

Make Your Own Coffee and Ditch Sugary Beverages

This may be one of the most arguable and annoying pieces of financial advice, but the point is that small charges add up. Four dollars spent every weekday on a coffee or sugary beverage translates to $1040 a year.

Spending less on coffee and sugary beverages is another good way to save some money. Make your morning coffee at home, drink coffee from the office coffee machine, or buy a reusable water bottle to rehydrate yourself for free.

Cut Out the Alcohol

Do you know what kind of beverages is even more expensive and unhealthy? Booze. Try cutting back or going alcohol-free for a month to see how much you save.

Stop Snacking

A snack here and there makes your wallet thinner and your waistline thicker. This is another example of small expenses that add up. If you can't live without snacks, buy cheaper and healthier snacks in supermarkets and bring from home what you need for the day. Avoid buying chips, chocolate bars, and other overpriced food from vending machines and convenience stores.

Shop With a List

Sticking to a list will help you remember what you need so you don't need to go back to the store again. A shopping list will also make you less likely to buy impulsively the items you don't need.

Avoid Shopping Hungry

Research shows that shopping while hungry makes people buy much more food than they need, which results in wasted food. Researchers have also found that hungry people are more likely to buy non-food items they did not intend to purchase (Source: The Proceedings of the National Academy of Sciences, Schwarz).

Buy Non-Perishable Food Items in Bulk

Buying in bulk is an easy way to save some money on food. Wait for the sales on non-perishable foods like rice, pasta, and beans and buy them in bulk.

Dine Out Less

We all understand that it would be better for our health and better for our finances if we cooked more of our meals at home. But we don't. Let's get straight to the point, eating out at a restaurant is a colossal waste of money. According to the Bureau of Labor Statistics, the average American household spends about $3,000 a year dining out. If you think there is no way you could spend that much, estimate how much money you spent last month on restaurants and takeouts and multiply this amount by twelve. You may be surprised how much money you spend on eating out every year.

Pay Off Your Outstanding Debts

Besides saving money on interest and fees, getting out of debt has other benefits. Paying off your debts can improve your credit score, let you focus on your financial goals, and can remove the emotional and mental burden.

If you have a growing unpaid balance on your credit cards or other debts, financial experts recommend using a part of your budget for bringing the balance to zero. Avoiding the ever-accruing interest is one of the best ways to save money.

Cut Entertainment Spending

You don't have to give up entertainment altogether. Decide what you want to keep and what you are willing to replace with cheaper options. You may even like those options better.

Find cheap or free ways to entertain yourself. Enjoy the great outdoors. Visit your local library. They have an endless amount of books, movies, music, games, and other fun stuff.

Do It Yourself

The Internet has tutorials for everything. Use it to find cleaning hacks, fixing tutorials, and cocking recipes.

Save on Transportation

Owning a car is one of the biggest expenses for many households. See if you could live without a car. If you can use public transportation or walk or bike to places. You can save a significant amount of money on gas, insurance, maintenance, and car payments.

If you can't leave without your car, you can try carpooling with a coworker or neighbor to reduce gas costs and wear on your vehicle. You can also combine errands and shopping trips to save unnecessary drives.

Save Money on Drugs

The U.S. Food and Drug Administration says that generic medications work just as well as their name-brand counterparts, but can cost 85% less (Source: FDA Generic Drug Facts). Switch to generic prescriptions, but of course, consult your doctor first.

Save Money When You Shop

Buy Generic

You don't need brand-name everything. For the most part, generic brands are equally good but are lower in cost. Try is a quick and simple way to cut your spending next time you go shopping.

Wait Before You Buy

The simplest way to avoid impulse purchases is to force yourself to wait at least a day before making a purchase. In a day you can decide if you still want it if you won't forget about that purchase.

Comparison Shop

We shop around when we look for a new gadget or buy a plane ticket, but sometimes we spend large amounts of money on expensive products or services without comparing prices. Doing thorough research before paying may save thousands of dollars. Shop around for everything and get as many quotes as you can.

Save on Clothes

Don't buy clothes unless you absolutely need them. For some, buying clothes is a way to display their social status, others buy the feeling of newness. In any case, for most people, new clothes aren't a necessity.

Buy Used or Get Things for Free

People buy new stuff and then sell it after realizing they don't need it. You can take advantage of this and pay little for perfectly fine items. Go to garage sales and shop in thrift stores at least some of the time. You can get what you need for a few dollars.

There are websites where people can freely give items to others. is a place to give what you have and don't need to people who may have a use for it. has a free section where people offer items they no longer need. Some other websites do the same.

Lower Your Housing Expenses

Get a Roommate

You can split your housing costs by finding a roommate. If your dwelling isn't big enough for two, you can find someone who is looking for a roommate.


Moving to a smaller house or apartment can save you quite a bit of money if it is an option for you.

Reduce Electricity Use

Use less energy. If you can save just $20 a month, you will save $220 in a year.

Turn the lights off. Replace all inefficient light bulbs with energy-saving ones. Unplug all electronics that you don't use often. Some devices continue to pull small amounts of energy even when off. Use less heat or air conditioning at night or when you're away from home. Adjust the air conditioner a degree or two higher than you normally would. Each degree increase saves about 10% energy use.

Quit Smoking

You don't need to hear again about the health and financial benefits of quitting smoking. Quit smoking already.

Don't Pay Bank Fees

Switch to a fee-free banking account if your bank charges you fees for not meeting their minimum balance or monthly deposit requirements.

Change Your Phone Plan

Opt out of all of the extras and cut internet usage. You might not be able to watch TV shows on a train to work, but you may have plenty of data for other activities. You can significantly lower your monthly cell phone costs by ditching your cell phone plan from a major carrier and switching to a prepaid carrier.

Look at Your Insurance

Whether it's a car, health, or life insurance, insurance companies may change coverage and rates yearly. Check your current insurance policies periodically, compare prices, and make sure you're getting the best deal for the least amount of money.

If you have home and auto insurance with separate insurance companies, you may get a better deal if you bundle your insurance policies and get them from the same company.

Let Your Friends Know That You Are Saving Money

It may be hard to save money when your friends invite you to expensive events and activities. You may feel obligated to spend. Tell your friends and family that you want to cut expenses. When they plan the next gathering, they may keep in mind your situation.

What Will You Do With Your Savings?

Don't treat the saving as disposable cash. Plan what you will do with your savings in advance. Clearly defined goals for your savings can help you remain motivated in finding new ways to cut your expenses. Will you finally pay off your credit card debt or build up your emergency fund? Or maybe you are ready to start a down payment savings fund for your future home and start investing? Save before you spend.

Getting Started

Budgeting and keeping yourself on a money-saving track seems overwhelming. But you don't have to do everything at once. In fact, you shouldn't. If you try to tackle everything at the same time, there is a greater chance that you burn out and give up on your saving plans entirely. You just need to start small.

Personal finance is a habit rather than an infrequent random act. Setting your spending on track and refining your budget can take a long time. Turn these saving tricks into long-term habits to reduce your spending and saving money will not be a chore anymore.

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