9 Ways to Cut Down Your Monthly Expenses
With each passing phase of your life comes plenty of new experiences, joys, opportunities and obstacles. The bright points may encompass things like gaining a higher education, getting married, having a child, buying a home, or going on that epic vacation you’ve always dreamed of. All of these adventures are rewarding and fulfilling in their own ways, but as you’ll find, many may add hefty expenses to your monthly bills…hence, the obstacles.
Indeed, those monthly expenses can really add up. With that higher education comes student loans; getting married now costs an average of $35,329 in America; raising a child through the age of 17 costs another $233,610 ; and the median home in the United States will set you back $200,000 .
In fact, the average American spends roughly 90% of his or her income each year, according to the Bureau of Labor Statistics. But even with all those bills, there are still ways to save and go further with your money. Here are nine tips to help you cut down your monthly expenses and save even more for the fun parts of life.
1. Create a Budget and Stick to It
The best way to start cutting down expenses is to first figure out just how much you’re making and spending each and every month. This can all be done with a simple budget, which you can create in just a few easy steps.
Gather all your income documents. Find where every penny is coming in from each month: from your main job and side gigs. Make sure to count your income post-tax in your budget.
Create a monthly expense sheet. Next, find out where all your money is going. Write down every single thing you spend money on, including student loan payments, mortgage or rent, entertainment, shopping, and food—right down to your daily coffee habit.
Compare the two. Are you spending more than you bring in? Are there areas you can cut back on? This is where you may need to go a little hard on yourself and reevaluate your habits.
Create a sustainable budget and stick to it. Once you decide what has to stay and what spending can go, it’s time to create a budget you can actually follow. Perhaps you can cut back on three coffees a week, saving about $5 each time, and put that weekly $15 toward a vacation goal. Or you can cut back on one of the things below to potentially save even more.
2. Become a Cord Cutter
You may love television, but odds are you hate the bill that comes with it. So, it may be time to join the 33 million Americans who have become cord cutters—someone who has cancelled his or her traditional paid TV service—to save a little cash each month.
According to the research firm cg42 , the average monthly telecom and entertainment bill for those still paying for television services was $203 in 2018. However, for cord cutters, that monthly payment was just $118, meaning they are saving an average of $85 a month.
3. Learn to Love a Lower Temperature
Keeping your home toasty warm may seem nice, but if you turned down the heat, you could save enough to knit yourself a sweater made out of dollar bills. According to the Department of Energy , those who turn down the thermostat by 10 to 15 degrees at night can lower their heating bill by as much as 10% annually. And, if you can live with a colder shower, dropping your water heater by 10 degrees can save you an additional 6-10% .
4. Start Riding a Bike More Often
Forget your car, pedal power is really how you’ll save. If your commute to work is safe and close enough to bike, why not give it a try? According to the Citi ThankYou Premier Commuter Index , the average cost of an American commute is $2,600 a year. That number could be less if you biked instead.
5. Try the Bottom Shelf of the Grocery Store
You may think you need that fancy mustard, but really, you just need mustard. On your next grocery trip, swap out all your favorite name brand items—cereals, condiments, spices, beauty products—with store brand or “private label” and see how much you can save .
6. Go Halves on Your Next Meal
Dining out is certainly one of life’s greatest pleasures, but it can also be one of the most expensive. As data in the Harvard Business Review showed just 10% of Americans said they like to cook at home, meaning the rest are eating out—a lot. In fact, according to the Bureau of Labor Statistics , the average American household spends an average of $3,008 per year on dining out.
We’re not suggesting you stop eating out, but you can do it in a way that saves some money: Order appetizer portions, which can cost much less and be just as satisfying, instead of entrees. Or try splitting an entree. At the very least, don’t be too embarrassed to ask for a doggie bag for your leftovers, and have them for lunch the next day.
7. Negotiate More
You may not realize it, but there are very few prices that are set in stone, and that may include your internet, gym, and cell phone provider costs. Using your powers of negotiation, you can reduce your bills on just about everything by asking for a lower rate. Shop around, find the best rate, ask your current provider to match it. If they don’t, you could walk away from your current deal and use the best rate instead.
8. Don’t Tell Anyone About Your Goals
Though you may feel inclined to tell everyone about your new budgeting habits, it may actually be a good idea to keep it to yourself. According to 2017 research by New York University, telling people about your goals “creates a premature sense of completeness,” according to Inc. .
Keep your goals for your monthly expenses to yourself for a bit. Once you’ve found a little success, then you can start sharing your tips and tricks with family and friends.
9. Refinance Your Loans
If your monthly student loan payments are a significant hit to your budget, there are ways to make your payments more affordable. Refinancing your student loans could help reduce your monthly payment, likely by lengthening your loan term and (hopefully) reducing your interest rate.
While refinancing can be extremely helpful, if you don’t want to lose out on federal loan benefits, it might not be the right choice for you. If you want to keep those loan benefits, you could instead consider income-based repayment on your federal loans.
Now, Here’s What to Do with All That New Money
Since you’re probably well on your way to saving more money each month, there’s just one thing to do with all that leftover cash: Open a SoFi Invest account, which can help you set personalized goals for your money, such as saving for a home, a vacation, or simply squirreling money away for the future.
And, because SoFi Invest accounts auto-rebalance, you won’t have to worry about the financial minutia while working toward your financial goals.
SoFi can’t guarantee future financial performance.
This information isn’t financial advice. Investment decisions should be based on specific financial needs, goals and risk appetite.
Advisory services offered through SoFi Wealth, LLC, a registered investment advisor.
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.