Reduce Expenses

A successful way to save money is to reduce expenses. There are many ways you can stretch your dollars and help avoid that "too much money at the end of the month" feeling. Some of these steps will take planning and investigation but they will be well worth the effort. Others you will be able to implement immediately. Some will require a small investment but have a substantial long-term payoff. Your ability to implement those will depend on available cash and your budget.


Where is your money going?

  1. Work out what you're spending money on now. What you will need first, is a clear idea of where your money is going, then you can look at ways to cut fluff and lower the cost of your required living expense. Always keep in mind that it is not just about cheaper; it is about efficiency. Analyze your needs and do the math. Most importantly, understand that reducing expenses is a lifestyle change and a change in your thinking patterns. Never let yourself believe that pennies do not count.
  2. Determine where you spend your money. If you do not know where your money is going, you are most likely spending too much. You can get a solid idea in as little as one month and as you continue, you will see patterns develop that you can address. Write down everything you buy down to the last dollar. Do not stop at the obvious expenses like rent, utilities, gasoline and food. Include the ancillary items like sodas and snacks as well as gum or tobacco. Use a Row-by-Column ledger, spreadsheet, or other software to keep track every month. If you only use a debit card for your purchases, the bank will do this for you.

Curtailing overspending

  1. Immediately remove unnecessary routine purchases. While it is likely this will not be the largest savings area, it is important and easy. Is the coffee shop on your way to work necessary? How critical are the three sodas or snacks a day you buy from the office vending machine at $1.50 each? A cup of coffee that you made at home is only 25-35 cents, as is a soda you bought in a store as part of a 12-pack. Do you seriously have to rent all those movies (and pay those late fees) each month? Have you checked to see whether your library has movies, or calculated the cost of switching to Netflix and BlockBuster Online? Those ten lottery tickets… the odds against you are astronomical. This is quick and most of it is habit. There will be some psychological pain at first but when you add up the dollars you’ll see a big difference instantly.
    • Make a shopping list before you go to the store and stick to it. This is especially helpful to impulse buyers. Did you ever go in for a carton of eggs and come out with a basket of 15 items? Did you need 2 for 1 bags of marshmallows or the jumbo box of cereal just because it was on sale? No. You probably did not need half of those extra things but ended buying them anyway. A shopping list gives you a clear idea of what you need and eliminates unnecessary purchases.

Cutting utilities expenses

  1. Address your utilities.
    • Heating and cooling (gas or electric): When you leave the house, set your thermostat to an "away" setting. Do not set it so far from comfortable that it takes too much of time to return to comfort when you get home: 65°F or 18°C in the winter and 80°F or 27°C in the summer might be reasonable numbers to use. A programmable thermostat will do this for you automatically.
      • Set it to adjust the thermostat a while before the heating or cooling is needed, such as in the pre-dawn hours to wake to comfortable temperatures and in the mid-afternoon to arrive home to them, and to provide less heating or cooling immediately when it will not be needed.
      • Consider investing in ceiling fans – you can get these for as little as US$20 and they dramatically reduce cost of heating and cooling by circulating the air more efficiently. If your expenses are already low, and you will not be staying where you are for long, you may not save enough to pay for the fan, however. Also, consider electric blankets and mattress pads.
    • Electric: Lighting is expensive. When you leave a room, turn off the light. The idea that it takes more energy to turn on a light than to keep it on is false, as turning on a light only burns as much electricity as burning it for fractions of a second.[1] Energy efficient bulbs work. This is an investment that will pay off over time, but there is a significant savings to be gained. (this energy calculator can help). Turn off your computer/laptop when you are not using it – (probably) the only reason you leave it on is convenience. Any voltage adapters (including the ones in stereo components) use electricity, even if they are not charged or plugged in to the device. Of the total energy used to run home electronics, 40 percent is consumed when the appliances are turned off. Either pull the plug on the devices when not in use or buy a device to do it for you, such as a Smart Power Strip ($31 to $44). If you have a digital box with an auxiliary AC outlet, plug your TV into it, and program the box to shut off the outlet when the box is turned off. For stereo components, plug them all into a power bar that can easily be switched off when not in use.Open the drapes during the day for light instead of burning electricity. Only use electricity when you need it.Clean the radiator on the back of your refrigerator, if it is dirty, this will improve the efficiency of one of the larger consumers of energy in your household.
    • Water: Save water, save money. Invest in a shower-reduction kit – they cost nearly nothing and will start saving you money immediately. They work by reducing the flow to the showerhead and the change is barely noticeable. Learn to take quicker showers – an inexpensive egg timer is a good way to help. Repair leaky toilets and faucets – this is an enormous waste of water and easy to fix. Reduce your lawn watering to minimum needs. If you have a pool, keep it covered when it’s not in use to reduce evaporation – also, if it’s heated that will dramatically increase evaporation as well (only heat your pool to keep it from freezing, and invest in a thermal blanket). Also, if you are not using the faucet turn it off -- e.g., when brushing teeth do not leave faucet running. Do not buy bottled water except in rare and unusual circumstances; excess chlorine can be removed from tap water by letting it stand in a pitcher in the refrigerator for a few hours, and the fluoride in tap water makes teeth stronger, reducing dental problems and bills.
    • Gas and miscellaneous: Do laundry as often as necessary but as little as possible – for many people this is a pleasant step. Reduce the temperature of your shower by a couple of degrees; the less work your water heater does the more money you’ll save. Also keep your water heater thermostat as low as practical; 120 degrees Fahrenheit is often recommended to minimize power consumption and risk of burns. (Turn off the house power before opening any panel to adjust it.) Use the microwave instead of the oven whenever possible – the cost just to preheat an oven is more than the cost to cook a meal in the microwave. Open the windows when it’s nice outside to reduce heating (and cooling) costs.If you live where natural gas is used only in the winter months, arrange with your local utility to do a seasonal shutoff so that you are not saddled with fixed monthly service charges for the "privilege" of being connected to the gas service even though you are not using it. With one supplier, it is $17/month. In the 8 months that you do not need the service, you're charged $17 X 8 = $136, but the season shutoff and turn on costs $54.
    • Cable and telephone: Do you need a thousand channels and every single premium channel available including the high definition packages? You can save the full $100+ on your cable bill every month by watching TV free online, and save most of it while avoiding time-wasting and unnecessary-purchase-inducing commercials by renting DVDs instead, for instance through the vending machines Redbox or through the mail-order company Netflix. However, if you have cable internet, it may actually be cheaper to keep basic cable than to pay for internet alone. If you want to save money, take a close look at your priorities. For your telephone, shop around based on your use. If you make many long-distance calls to family and friends, perhaps one of the unlimited plans would save money. If all your calls are local, you probably can get by with a bare-bones option. Consider that your cell phone may have free long distance; therefore, removing the need of having long distance on a landline. Look into the Voice-Over-IP (phone over the internet) for your telephone solutions. Some services, such as Skype, gChat (from Google), and Windows Live! allow you to make free video calls to other users as well as make low cost calls to cell phones and land lines from your computer - including international calls. Other VoIP services, such as Vonage, are not an option for people with DSL, which is tied to their landline.
    • Cell phone: Text messages cost money. "Oh no, I have unlimited text!" Oh? How much does that option cost you? Do you even need a cell phone? Does everyone in your family need a cell phone? Parents should place rules on cell phone use. Another thing to consider is if you need a cell phone then do you need a landline at home? Consider consolidating. If your cell phone use is occasional only, consider a pay-as-you-go plan. Do consider, however, that a cheap unlimited data and navigation plan can sometimes save money by allowing instant price comparisons and quality checks.
    • Cell phone saving plans: Some mobile phone plans are genuinely good and money-saving; but make sure that you shop around first for the deal that best suits you. Many companies offer either contract or PAYG plans based on the cell phone habits of the user, for example, someone who texts an awful lot or someone who prefers to call. For example, some companies reward you for topping up for a little bit a month with hundreds of free texts, which can prove handy and are much cheaper than calls. Remember, calls to networks other than yours, and landlines, are often pricier. Avoid "traps" in cell phone plans such as inordinate per-kilobyte or per-message rates, often over some threshold. Look for a plan with modest, if any, overage charges. For instance, Sprint smartphone data is unlimited.
  2. Use solar lighting. There are some cheap solar lights on the market that work very well. There are also more expensive ones that have other functions as well. The best thing is that solar lighting functions just as well and is just as bright as those lights that you plug into the wall and you can leave it all night and recharge it in the daytime when you're ready.

Cutting down on vehicle expenses

  1. Reconsider gasoline and miscellaneous auto costs. When gas was rationed during World War II, a popular slogan was "Is this trip necessary?" Ask yourself that every time you get in your car.
    • Make a list before you go to the store so you do not have to make extra trips.
    • Do not go for a drive for pleasure – walk instead or choose other forms of entertainment (for example, reading or exercising).
  2. Check the pressure in your tires. Convertibles get better mileage with the top up (although the slight pleasure for the mile or two per gallon sacrificed with the top down is cheap entertainment, assuming one has already paid the considerable extra money for a convertible). A poorly running engine is a huge waste – even a spark plug change can make a big difference, as can clean oil. In addition, the less you drive, the less often you will change tires, oil, or need maintenance. That is a savings-over-time, of course, but it will mount up.
  3. Drive smarter. Another way to save gas (and money) is to change your driving habits. By simply driving more slowly, or less aggressively, you can save significant amounts of money (calculate for yourself at this web site [2]). Take particular care to avoid driving in heavy traffic, which causes no joy and little efficiency gain over public transportation, and to avoid where parking will be expensive. Public transportation mapping and schedules online, often provided by transit agencies, can make that a great alternative in cities.

Reducing entertainment and fashion costs

  1. Cut down on entertainment. It is astounding how many people complain about money then describe the latest release of a movie with the cost of theater popcorn. In addition, professional sports event, a music concert, or tickets to a play can run hundreds of dollars for a couple on a date. Seriously, can you tell the difference (blindfolded) between a $30 bottle of wine and a $9 bottle of wine? When you do dine out, think about the prices on the menu first. Consider a meal share if the restaurant offers that option. Never, ever order delivery of expensive food; you are wastefully enjoying only the food and not the atmosphere when you could cook for yourself far more cheaply. Look for vacation bargains – consider taking the kids camping instead of one of the expensive amusement parks.
    • Most people, except for serious athletes, actors and musicians (as the case may be) cannot tell any difference between a great and good performance. Even if they can, most will enjoy increased variety and frequency much more. Enjoy local high school and non-prestigious college sports, community theater and orchestras conveniently, for little money (with typically nice but inexpensive meals in the vicinity), and socialize and contribute to community spirit while you are at it.
  2. Make the most of your clothes and other fashion accessories rather than buying more unnecessarily. Rediscover and show off old ones "lost" in storage or the back of a closet, and organize your wardrobe (or whatever you keep them in) and habits to prevent "losing" them again.

Spending less on food and drink

  1. Focus on food. The only real difference between a $1.99 can of corn and a $0.63 can of corn is $1.36, and the satisfaction of knowing you're not overpaying largely to feed a cycle of ads to make yourself and others fret about not paying more. (Sure there are exceptions; people on low-sodium restricted diets will often have to pay more). The grocery store is a place you can save big.
    • Look for foods that are marked "WIC" for savings. Those have been approved for the Women, Infants and Children program by the USDA Department of Food and Nutrition Services… healthy, nutritious and inexpensive. That ring of cooked shrimp is on sale and sure looks tasty. Would you prefer a grilled chicken breast with green beans and rice? Make dining in an experience instead of just a convenience. It is possible to spend as much on home food as you would by eating out if you are wasteful.
    • Buy foods that are on sale, especially meats. Most supermarkets regularly cycle through various meats for specials; you will get to try them all just the same. The difference between expensive beef and other beef is just extra fat and tenderness compatible with not-thorough cooking in the expensive beef.
    • Invest $10 in a coffee pot, or $100 in an espresso machine (pump-driven is best, but expensive ones can die just like cheap ones). Making your coffee at home instead of purchasing your $1, $3, or $7 custom latte at the coffee shop will save you money.
    • When purchasing meat items, aim for pieces where you can identify the body part from which it came. Ground beef, although cheap, is processed which increases its price. Tougher cuts of meat can be slow-cooked and made incredibly tender. Also larger pieces can be cooked in bulk and used for several different recipes. (Cook one large piece and when tender, tear it up for use in enchiladas, sandwiches, stews or soups, etc. Simply store in individual portions, labeled with the type of meat and date, for later use.) Organ meat (chicken hearts and gizzards, beef hearts, tripe) are often far cheaper than normal cuts, and can be used to make tasty and filling stews.
    • Avoid large packages of fresh produce to avoid spoilage; frozen produce will extend the shelf life of all your fruit and vegetables.
    • Buy fresh foods that are in season. They will cost less than the fresh food flown in from the other side of the world; the customer has to pay for the fuel that got the food there.
  2. Consider taking your lunch to work instead of buying lunch each day. Even an inexpensive lunch out is several dollars a day – do the math.
  3. Use coupons whenever possible. Make sure these are on items you would normally eat so you do not buy groceries that will be wasted by sitting in your cupboards forever or spoil in your refrigerator. Also use buy store specials and use store customer cards when possible toward food purchases. Consider, however, that store brands are just as good as and often cheaper than name brands with coupons.
  4. Look into joining a warehouse club. The price of the membership is usually made up in the first shopping. They carry name-brand products and take coupons. In addition, by not having to shop as often, you spend less money by not being in the store every week and risking impulse purchases. Warehouse club shopping must be done with discretion or you will not save money.
  5. Measure product use carefully. For example, soap powder, flour, dishwasher detergent or cereal. Do not be wasteful with the product just because it comes in a large container.
  6. Buy products you will use instead of substituting just because it is on your list and the only item available. Are you going to enjoy that box of cereal that is not your regular brand, or is it going to sit on your shelf uneaten?
  7. Be aware of the influence that product promotions do have on your purchase habits. Do your best to Track the Influence of Advertising on Your Personal Spending. If a promotion is luring you in, ask yourself if you normally use the product. If not, ask yourself what possible benefit it will be to start using it now. If you only want it because it is stuck in front of your face and seems appealing, that is not enough of a reason to purchase it.
  8. Avoid or minimize addictive or mind-altering substances, those which are illegal, currently expensive, decrease current productivity, decrease future productivity, cause health problems, or decrease judgment undermining reduction of expenses. Alcohol has all of these adverse consequences.

Making insurance savings

  1. Address your insurance costs: The fastest way for some people to reduce monthly expenses will be in the area of health, auto and life insurance. Companies that sell those are incredibly competitive. Get some bids from different companies. When you do this, bear in mind that lower initial premiums will not always be the most cost efficient!
    • Auto Insurance: Look at your deductible. Avoid jumping to increase your deductible – analyze the entire plan based on your needs and expectations; do a risk analysis first. If you have an inexperienced driver in your house and you do not have savings, having a high deductible might not be the best choice. If your car is financed, you may have minimum insurance requirements. However if you have a long history of good driving and you own your car, outright, you might consider a high deductible to save on premiums.
    • Health Insurance: Explore alternatives. Shop around for plans that are consistent and cost-efficient with your lifestyle. Consider your needs versus what you have. A single man in perfect health in his mid-30’s might choose a plan with a higher co pay or co-insurance and lower premiums, whereas a married couple wanting to start a family might do better with higher premiums but more extensive coverage. In other cases, prescription benefits might be the most important. The point is to look at what you must have .
      • Another alternative: Join a health sharing initiative. Members of health sharing groups pay for each other's health care with significant reductions in costs and a fraction of the out-of-pocket costs (such as the deductible found in most health insurance plans). They also qualify for ACA requirements. The best part about them is that you get to choose your own doctor (yes, really!). Most, but not all, health sharing groups are faith-based and require specific faith affirmations.
    • Life Insurance: There is no question that this is important – for many people. The rule of thumb for someone with a family is three to five years' replacement income. However, if you are a 20ish single consider carefully and determine if you are over-insured. If you’re married in your mid-60’s have you looked at comparative plans from places like AARP? If you are most interested in "burial policies" then, again, these companies are incredibly competitive. We would like to leave our loved ones wealthy if our demise, but not at the expense of your quality of life right now.
    • Save Money on Homeowner's Insurance: This can be a large expense and many home owners have no idea how much they’re paying because it comes out of their house payments – out of sight, out of mind. Review your plan with your agent. Are your personal possessions worth the $250,000 you have on the policy? Also look for areas that are lacking. Is water damage covered; snow damage; hail damage? Think whether you will need those. Is anything important excluded? Is anything irrelevant included? Yes, Great-Aunt Martha’s rocking chair has sentimental value, but do you need a special rider to cover it?

Saving money on goods in general

  1. Consider pre-owned items. This is a great way to save significant amounts of money while recycling! If you absolutely must buy something, there are options other than a mall anchor store or a big-box superstore. There are large thrift stores (e.g. Goodwill) and smaller church-run stores that have some incredible bargains on everything from home knickknacks to appliances to clothing. It is beyond imaginable how fast a 4-year old will outgrow shoes (when that happens, re-donate them so somebody else can benefit). Look for garage sales – your neighbors will not think less of you because you bought the winter jacket they are trying to sell. Have your own garage sale and they might want what you no longer need. There are online sites that often have bargains (like, and
  2. Save money on razors. If you shave compare razors for durability. Some shave satisfactorily for many, many times longer than others, making their cost of up to a few dollars each cartridge relatively insignificant.
  3. Avoid items, however cheap or appealing, which have a primary effect of causing large and unnecessary spending. Some of these items, such as printers and suits, though rarely vehicles, are helpful to get rid of even if they are not broken. Culprits include:
    • Inkjet printers (a laser printer can cost as little as $100 and cost about 3 cents each page to print, rather than 25 cents or more, with fast waterproof output.) Color laser printers can be cost-effective if much color printing is needed, though they are not great for photos. Online or in-store photo printing is a better deal than the high-quality ink-jet printers suited to photos.
    • Wool suits and iron-requiring cotton clothing, unless important to creating an impression needed to earn money in one's occupation. Iron-free cotton shirts with a fine pattern to hide residual wrinkles look great, save over a dollar each time plus time, and gas in laundering. Synthetic pants save multiple dollars each laundering and do not feel odd on legs because they are less sensitive than arms.
    • Most television and, to a lesser extent, movies. The purpose of television, from a financial perspective, is to cause you to watch advertisements to become unhappy that you do not own things you would not mind not owning. Few of these things are more than frivolous. More insidiously, there is a purpose to keep you watching, which drains efforts from possibly more enjoyable or educational (and thus potentially income-producing) activities. Many movies are about focusing on lavish and extravagant living and create a mindset incompatible with frugality.
    • Fancy cars. The fastest cars available accelerate about twice as fast as, corner about a third harder than, and have slicker, shinier seats than the cheapest. The differences are much more subtle. Mass-market cars such as family sedans and minivans and professional-driver-market vehicles such as town cars, vans and pickups have enormous companies optimizing them for things such as cost, comfort, fuel consumption, safety durability, and ease of maintenance. More expensive cars, even when not driven beyond the abilities of any others, often make large sacrifices in some of these things for small improvements in others. They also involve much higher overhead because of smaller sales volumes. If many people in your area replace good cars unnecessarily, a well-maintained and carefully inspected used car can save a great deal.
    • Video game consoles and other devices, electronics, with vendor lock-in. These may seem inexpensive and can be a good deal if one is sure one wants only few games or other accessories to play often. However, adapting them to various games or other uses requires paying an excessive markup each time. In contrast, a computer has many games available inexpensively once they've been out for a year or two and many made available free by their creators much like wikiHow, such as Nexuiz.

Taking good care of your finances

  1. Actively manage your credit. A poor credit score costs tens of thousands over the years in increased interest rates and insurance costs. You may even lose your job or miss a job application. Pull all three reports; challenge everything that appears incorrect. Pay all bills on time or early. Pay off revolving debt (credit cards) and put those cards away.
  2. Avoid the overdraft on debit cards. An overdraft may seem like a good idea, but it is simply one-step nearer to a pricey pitfall. Even if the bank you are with does not charge you for using the overdraft, they will charge you if you even conform over it. The good thing about debit cards is that you are not using money that you do not have, and an overdraft will most weaken your discipline over your finances. Do not do it! If you must currently have credit card debt or an overdraft do not forget to compare interest rates, on all your cards and overdraft. Consolidate loans to the most inexpensive one while paying off the debt.

Reducing housing expenses

  1. Avoid excessive housing expenses. A safe area and, if you have children, one with a school where they will be permitted to learn in peace is important. If you enjoy a big yard and big windows, or convenient regular access to varied shopping (itself not helpful in frugality, like neighbors living extravagantly and often beyond their means), recognize, and pay for that. However, a house sits in the rain and rots slowly as it is being (hopefully) enjoyed, and can be replaced or copied on months' notice in ways that are being made more efficient continually. There is plenty of empty space to build them, and less-densely-developed areas can be expected to compete to make money from increased development over time if that is demanded. As recent history shows, it is not a great "investment" though it does have significant residual value and some people do make money with them.

Budgeting Help

Doc:List of Expenses,Low Income Budget,High Income Budget


  • Think about every purchase before you make it. Ask yourself whether you need it or simply want it. Do you already own something that will perform the same task? Is it of good quality or will you need to replace it after a few uses? Most importantly, are you willing to put off your savings goals to have it? If an item is superfluous, just say no.
  • Stop gambling. If you gamble (unless you are consistently making money and you know that from tax returns, of course)… stop. Quit. The odds against winning the Powerball lottery are around 150 million to 1 against you.
  • Use the 24-hour rule. Wait 24 hours before making the purchase for non-critical items.
  • Limit alcohol. Alcohol is an added expense you may be able to remove, or at least significantly reduce.
  • Consider investing in reusable items. Rechargeable batteries are a good option if your battery consumption is high – the question you should ask yourself is: why is your battery consumption high and how can you reduce it?
  • Quit smoking. Apart from the $150 a month, there are the enormous added costs to your health and life (and possibly auto and home) insurance and a strong (almost guaranteed) potential for extraordinary health costs.
  • If you subscribe to non-essential services, like satellite radio, prepare yourself mentally to cancel the service and then call their accounting department. Advise them that you are cancelling - they will transfer you to several people but each time tell them the truth - you want to cancel because you cannot afford the service. If you persist, they will offer you a discount - a substantial discount - to continue service because it is much cheaper for them to keep a customer than to get a new one. If they will not give you a discount - cancel the service and do without it while you save some money.
  • Insulate. Insulation for your attic, walls (including outer wall electrical outlets) will save you money over time. Check the weather-stripping around the doors to the outside. If you can see daylight between the door and frame, buy a roll of adhesive foam door seal and close those cracks.
  • Stop using paper napkins and paper towels. Cloth towels are absorbent and can be used repeatedly. Cloth napkins can be made from an old tablecloth. They also clean much better than paper.
  • Grow a garden. Even a small plot can yield significant amounts of fresh food. You can of course spend a fortune at the garden store but shop around, ask neighbors and grow your own starts.
  • Recycle and reuse. The plastic bags for your groceries make good trash bags too. If you want to become efficient, consider ideas like saving your cooking grease (baby boomers already know that) or reheat that half-full pot of coffee. If you want two cups of hot tea tonight, one bag is enough.
  • Measure the power consumption. Electricity monitor is an effective device in real-time reveal of data that instantly measures the power consumption of the line. It displays, in real time, how much electrical energy your household usages in dollars and cents and kilowatts. Studies have proved the usage of energy saving information in real-time energy yields 10% to 20%.
  • Use handkerchiefs when you are not sick. They are not gross if regularly washed, hygienic, and handier than tissues.


  • Don’t go overboard.

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Sources and Citations