Looking for ways to cut expenses and save money? Our guide offers practical tips and strategies to help you reduce your spending and improve your financial situation. From tracking your expenses to negotiating bills, we’ve got you covered.
An honest look at your finances and some creative problem-solving can help even things out again. And fortunately, it doesn’t mean the end of those fun things you are spending money on – it just sets you up to be more conscientious about them in the future.
To speed up paying off your debt – or hitting any other financial goal – you’ll want to squeeze every dime of unnecessary spending out of your life. Over the course of a busy life, you collect a bunch of what we call “junk spending” – old, unused subscriptions to magazines and websites, memberships to gyms and discount clubs, assorted extra services, and more.
Here’s how to get your finances back in check.
Table of Contents
Understand the scope of the problem
“I honestly didn’t know how much I was spending” If this sounds like you, you’re not alone.
You need to understand where your money is going before you can begin planning for where you want it to go.
To track your spending, start by pulling up your banking and credit card statements for the last full month. Then, record each earning and expense down to the penny in a spreadsheet or on a piece of paper using a calculator. Make sure to categorize each item by type, such as bills, groceries, savings, and spending money. This will help you see where you need to cut back, save or adjust.
If you choose to use a spreadsheet, Google Sheets is a good option. However, a simple piece of paper and a calculator will also do the job. Don’t be afraid to face the reality of your finances. It’s better to know where you stand than to constantly feel stressed about money without knowing why.
Keep track of spending with an app
One of the first steps to spending less is finding out where all your money is going. If paper and pencil is not your style you may want to try using a personal financial management (PFM) platform. When you download a budgeting app like Mint or You Need a Budget (YNAB), the app tracks your spending habits so you can adjust to spending less.
Money-saving tip: Search for budgeting apps and download an app that tracks spending and offers suggestions on how to spend less.
Find out: Build a Budget That Works for Your Goals
Create a budget
Before you can curtail overspending, you must know how much income you have to work with and where most of it goes each month. That’s where a budget, which is essential to good money management, comes in handy. You can easily set up a budget with a budgeting app such as Mint, PocketGuard or Honeydue (for couples). Prefer a hard copy? Download a budget template online. Figure out your income, expences, and where you would like your money to go.
Find out: How to Create a Budget
Know your shopping triggers
We all have days when the boss is on our back, we’re feeling anxious or depressed or some other emotion leads us to our phone or laptop for some online shopping to cheer us up. Shopping when you’re upset or bored is a recipe for overspending on things you don’t need.
So, next time emotions push you towards unnecessary purchases, go for a walk to clear your head instead or call a friend to talk you down from the impulse purchase ledge.
Check your credit card account daily
No one wants to look at their credit card balance every day, but if you do, the specter of your upcoming credit card bill will haunt you with every unnecessary purchase. And you won’t be surprised to find out that your credit balance jumped $1,000 in just a week when you weren’t paying attention to how much you spent.
Review bank and credit card statements
If checking your credit card balance regularly doesn’t put the fear of overspending in you, reviewing all your credit transactions for the month should do the trick. Look closely at all your purchases to find out where you’re overspending so you can trim the next statement of even small transactions that can add up to one big debt headache.
If you are feeling adventurous, call you credit card company and ask if they could reduce your interest rate. If you have a good payment history and decent utilization rate they might drop it a percent!
Find places to trim
After getting it all on the spreadsheet, you can see a ton of places where you could trim money.
One step at a time
To get started, pull out one monthly bill, credit card or checking account statement and go through every expense listed. If it’s a recurring monthly charge, think about how much you really use it, whether you can live without it or if you can substitute something cheaper.
Start with the small stuff
Take a look at your monthly credit card bills and debit card charges to find out if you’re paying for subscriptions you don’t use. Then cancel them to free up more money each month.
Look at your subscriptions and immediately cancel anything you don’t regularly use. Are you paying for an Amazon Prime subscription even though you haven’t ordered or watched anything in six months? Cut out a magazine subscription as well, but keep subscriptions if those are what you use almost daily.
Cut out the $5 a month you are spending on a mobile app you never use, or a messaging service you’ve forgotten. Evaluate what is most important and remove the unnecessary online diet subscription, gym membership, or anything else that automatically renews with a credit card charge or checking account debit every month. Don’t keep paying just to have the false feeling that you’re doing something about getting fit or losing weight.
Shed those invisible services
Review all your bills. Have you noticed that your internet bill was higher than you thought it was? A 10-minute phone call with the provider and it might be $30 cheaper. You can try the same thing with your car insurance or even interest rates on your credit card. If that seems daunting, try practicing something like this: “I noticed that my bill seemed a little high and was considering switching to a different provider/company. I wanted to check first to see if there’s any way to bring my bill down?”
Look for things like insurance that might have been automatically added to your electric bill. Make sure you are not the victim of phone bill cramming for services like interior line repairs, or third-party services on your phone bill. Are you paying for additional perks on your car or homeowners insurance that you’ll never use? If so, get rid of it.
You may not think much about paying $3 to $5 in fees every time you withdraw cash from an ATM owned by a bank where you don’t have an account. But if you use non-network ATMs all the time, you could blow through a lot of money without even realizing it. The same goes for credit card cash advance fees and late payment fees.
To rid your life of these unnecessary fees, use your bank’s ATM to withdraw enough cash for the week. That way, you won’t have to hit up another bank’s ATM and pay extra fees. As for cash advances, try to avoid them altogether. When you get a cash advance, you’ll usually pay not only a cash advance fee but also higher interest than you’d pay on a regular transaction.
Tackle the bigger expenses
You don’t have to ditch your entire cable package, but you can weed out expensive premium channels you never watch and get free DVDs at the library. Likewise, cancel extended warranties for appliances you don’t own anymore, discount buying clubs you never use, and any other unconscious, habitual spending that doesn’t give you real value. If your cellphone data plan routinely comes in under your limit every month, switch to a smaller, less expensive plan.
Look at consolidating debt from two credit cards to see if you could get a lower payment. It might not turn out to be a good option right now, but you’ll be glad you did the research.
Talk to a debt relief specialist to find the best way to pay off credit card debt.
Learn to say no
This can be the hardest thing to do, but what really helps is to have conversations with friends about money. It can feel bad to tell friends and family that you’ve been genuinely worried about spending so much and might have to say no to some social outings coming up.
But it can turn out to be a huge relief when they said they’ve been tight on money too and you should hang out at home more often. Now you can all stress a little less. Having an accountability partner is a great way to keep your budget in check.
Do a no-spend day challenge
One of the best ways to control your spending is by not spending. While this sounds simple, it’s anything but. Instead of going all out trying to curb your spending, start small by doing a no-spend challenge.
Pick a day and only buy necessities. Gas for your car, groceries, bills, etc. all fall under this label. What doesn’t qualify? Your morning latte, lunches out, or a quick pick-me-up afternoon treat. Instead, make coffee at home, pack a lunch, and bring snacks.
Challenge yourself to do more than one no-spend day every week. You’ll start to notice the savings quickly adding up as you have more money in your account every month. Add up how much you’ve saved at the end of each no-spend day and put that money toward paying down your debt.
Shop with cash only
Using a credit or debit card for all of your purchases can separate you from the pain of spending. Shopping with cash means physically handing over dollar bills with every purchase. It also means watching your wallet grow lighter every time you buy something.
Paying with cash can help you stay within budget. Forking over your hard-earned money makes you feel the pinch of spending. The downside of cash is that it can be difficult to track what you spend. To solve this, try using envelopes for each budget line item where you’re planning to use it.
Put the weekly or monthly budgeted amount in the envelope and use only what’s inside for your spending. When it’s gone, it’s gone. To get started, pick one or two categories where you keep going over budget and use cash. This will give you an idea of where your money is going and help curb your spending.
Know your budget
Don’t think of a budget as something you put together and maybe check once a week. Doing so is a sure recipe for going over and spending too much. Instead, look at your budget regularly – once a week or every few days.
If it’s hard to keep track of expenses against a monthly budget, divide it up into weekly mini-budgets. This will make it easier to check if you’re going over what you planned to spend and make adjustments. If you have a significant other, make sure to involve them in the process as well.
Stick to your list
If you run into the grocery store sporadically whenever the need arises, you’re probably spending too much on groceries. Next time, make a list for the weekly grocery shopping to cut down on rushed trips where you don’t have time to worry about prices. Before you head to the grocery store to stock up, go through your fridge and pantry and check if you’re running low on anything.
When planning out your meals, make sure you have all of the ingredients. Add any missing ones to your list. As an added bonus, do a rough estimate of how much the shopping trip will cost you based on what you plan to buy. Keep an eye on the total when checking out and stay under your estimated amount.
Grab your list when you head to the store – and stick to it. This means not buying anything that is not written down. What if you pass by the dairy section and realize you’re out of yogurt but forgot to write it down? Tough luck, keep moving. This will teach you to get better at writing out your shopping lists and estimating your budget.
Institute a cooling-off period for items over $50
You may get so excited while shopping that you happily shell out a payment for the full price of clothing, electronics, furniture, appliances, and other items. But if you wait until things go on sale, comparison shop and check out the sale and clearance items online or in the store, you’ll often find a better deal than the cost of the full-price item.
If you’re shopping at a major retailer without price-matching items on the store’s website before you purchase, you’re probably paying too much. Always look up store items on the retailer’s website before you buy. If the price on the site is lower, many retailers — Target, Walmart, Office Depot, and Walgreens, for example — will match the online price if you inform the cashier.
If you struggle with impulse purchases, designating a cooling off period can help you avoid unnecessary purchases. How many times have you bought something and then regretted the purchase a few days or months later?
Impulse purchases can quickly add up over time, putting a dent in your budget. Consumers cough up $5,400 a year on impulse purchases, says a study by Slickdeals.net. That’s $450 extra a month that can go toward paying down debt, your retirement, or padding your savings account.
To help curb unnecessary spending, institute a 72-hour cooling off period for any purchase over $50. This will give you time to consider if you really need the item. Sometimes you may see something that’s on sale or looks cool and you want to have it now.
Taking some time to think about the purchase will give you the chance to decide if you really need it after all. You’ll be surprised how many times the urge passes once you leave the store or click out of the browser.
Unsubscribe from sale alerts
There’s nothing that makes you want to whip out your credit card faster than checking your inbox to find an email about a sale at your favorite retailer. How about those emails offering an extra 30 percent off or free shipping for the next six hours? All trying to entice you to click over and spend money on things you don’t need.
The best way to save your budget – and your inbox – is by hitting ‘unsubscribe.’ Go through your inbox and unsubscribe from all sales emails. Every single last one.
If you’re an iOS user, Apple added a quick ‘unsubscribe’ shortcut at the top of the message. Google’s Gmail app for Android has a similar feature in the top right corner. Alternatively, you can manually unsubscribe from each mailing list. It’ll take some time, but it’ll be totally worth getting back your inbox.
Freeze your credit cards
Trying all the tricks but still failing to see savings? Freezing your credit cards may be just what you need to get back on track. This means literally freezing your cards in water in your freezer. Grab a plastic container, fill it up with water, and drop your credit cards in there. Stick it in your freezer and let it harden.
Now, every time you have to use your credit card, you’ll need to let it the ice melt. This will give you enough time to consider whether you really do need to make that purchase after all. The forced thawing out period and added pain each time you need to use your card can be enough to curb your spending.
For this to truly be effective, you’ll need to delete all credit card information from any online retailers such as Amazon or Target that have it stored in your profile. This will prevent you from cheating by going online to make a purchase.
Find out: How to Place a Credit Freeze
Stick with in-network ATMs
Do you run to just any ATM every time you need cash? If so, you’re paying around $4.50 per transaction, according to a recent survey. That’s because when you use an ATM not affiliated with the card’s bank, you’re charged two fees – one by your debit card’s bank and another by the ATM’s bank. Don’t pay those unnecessary fees.
Look up locations for your debit card’s bank and only withdraw from authorized ATMs. You can also get extra cash with no fee when you use your debit card in retail checkout lanes.
Get professional help to clean up errors in your credit report.
Question everything you’re spending
Look at your subscriptions and immediately cancel anything you don’t regularly use. You’ll find that most expenses you’re considering cutting back on are something that you can absolutely live without. Strip away societal pressures, ego, and FOMO (fear of missing out) and you’ll find that there’s not much else you actually need aside from the essentials.
Remember that indulging in something you enjoy is not necessarily a bad thing, as long as it does not hinder your financial stability or prevent you from achieving your goals.
Buy the expensive coffee or chocolate if it brings you joy! There is somewhere else you can cut corners that won’t affect your overall happiness.
Does it offer any long-term benefits like improving your productivity, your mental or physical well-being, or saving you time? If you can’t think of any meaningful benefit beyond a few moments of pleasure, it might be worth cutting out of your budget.
Maybe you like to get your hair and nails done regularly, purchase new music or enjoy a monthly massage. Or, you love going to concerts or professional sporting events with your friends. If something boosts your happiness, social life, or well-being, try to keep it and find a way to cut the budget elsewhere.
Eliminate your cable service to free up money for a monthly massage. Take your lunch to work to save cash for tickets and concessions at the occasional ballgame.
Get rid of cable, buy a TV antenna, and never picked up a complicated remote again. You can still receive 25 network stations, and the monthly Netflix subscription offers plenty of entertainment. When paying off debt, you’ll have to resist spending on a few indulgences, so you can afford to keep one or two. For example, if you’re paying someone to mow your lawn or clean your house, you could do the job yourself and use that money for an occasional movie or dinner out.
It’s unreasonable to expect that you’ll be able to strip away all of your usual pleasures. The key to making these budgetary changes sustainable in the long term (which they need to be in order to get out of debt as soon as possible). Part of this can involve scaling back rather than cutting out completely. This can mean making something yourself or reducing the frequency of purchases.
If it’s a weekly tradition to go to the movies on Sunday, consider having a movie night at home instead or reduce the frequency to once every two weeks. For greater (or alternative) savings, you could skip the concessions or opt for cheaper matinee movies. Little adjustments can add up to major savings.
Even though you like your coffee out, try brewing your own on weekends to offset the expense. How can you tweak your favorite splurge? If you’re spending money dining out and want to start cooking meals at home, you can still allow yourself to go out a few times a month, so you don’t feel deprived.
You can always find nightly restaurant specials and coupons that allow you to dine out on the cheap.
Repeat after me, “I noticed that my bill seemed a little high and was considering switching to a different provider/company. I wanted to check first to see if there’s any way to bring my bill down?”
Congratulations, you just saves some money and all it took was a few minutes. This works for insurance, internet, and phone service.
There are plenty of services that make it easy to get things for less. Many streaming services have ad-supported tiers that cost less per month. Skip your monthly audiobook subscription and instead become a member of your local library. Have a restaurant you love? Find out if they have happy hour specials. It might take a bit of extra research, but getting to continue enjoying what you love while paying less will always be worth it.
Cutting cable and cooking meals at home saves me at least a few hundred dollars a month, between $2,000 to $3,000 a year. That’s money you can use to pay off debt, save or spend on a vacation or home renovation.
Think about how much you’d be able to pay toward debt or stash in emergency savings if you only went out to eat a few times a month or drove your older car for one more year. Come up with a compromise that works for you.
Keeping a couple of unnecessary expenditures helps you stay motivated to pay off debt. That’s because feeling poor all the time can make you want to just give up and return to your old ways.
Instead, envision the positive outcome you’ll gain from temporary sacrifices such as how much lighter you’ll feel when your credit card has a zero balance.
Top ways to reduce expenses so you can pay down debt
Stop the cable TV madness
With so many streaming subscriptions available, do you really need all those cable channels and the big bill that comes with them? Probably not. If you subscribe to a few streaming channels instead, you can easily stay under $50 total for TV entertainment.
Monthly savings: $100
Do you buy whatever you like the minute you spot it? If you don’t take time to compare prices, you’ll often pay more than necessary for health and food items, appliances, auto insurance and really, just about anything. Take a moment. Breathe. Compare.
Get online and shop prices, and not just on big-ticket items. Retailers such as Walmart, Target, Best Buy, Petsmart, and others will match online prices for in-store purchases. For even more comparing, download Honey, a free browser extension that automatically applies the best coupon code during checkout at stores, restaurants and travel sites.
Evaluate insurance policies
Call various insurance agents when your annual homeowner’s insurance rate increases and find a good policy with a reputable company that saves you hundreds of dollars annually.
With homeowners, car, or other insurance policies, you can opt for a higher deductible to receive lower rates. However, to make sure you don’t under-insure, check out United Policyholders, an impartial nonprofit organization that offers insurance advice and resources.
Annual savings: $600
Save $40 a month on your cell phone bill by simply calling the provider and asking for a lower rate. The agent can switch you to a less expensive plan and also apply a loyalty discount. Call your phone, cable, and Wi-Fi providers and ask about less expensive packages.
Monthly savings: $40
Get a roommate
This will cut utility costs and your rent or mortgage payment in half. You might love living alone, but when a friend moves into your apartment for a year, you could save thousands of dollars to put toward a down payment on a house you will buy after she moves out.
Monthly savings: up to half your housing
Run errands strategically
To save on gas, make a point of lumping several errands together into one trip. For example, t shop for groceries on your way home from the gym or make plans to meet a friend near the hair salon on haircut day.
Monthly savings: $40
Prepare more meals at home
The average American household spends nearly $3,000 a year dining out, according to credit card and insurance resource ValuePenguin. That’s $250 a month you could use to pay off debt or build emergency savings. By taking your lunch to work and making your own dinners, you can reduce spending significantly.
This might the best way for you to cut expenses and save money on groceries. Buy only meat that’s on sale and stick with meals that revolve around inexpensive ingredients such as potatoes, rice, eggs, tortillas, beans, fruits and vegetables, noodles, and cereal. Homemade soups also go a long way, and you can freeze some for later.
Monthly savings after grocery costs: $200 to $400
Money-saving tip: You could get discouraged if you totally deprive yourself of the pleasure and convenience of going out or getting takeout. Instead, prepare most meals at home but allocate a small amount in your budget for dining out once or twice a week.
Bring your lunch to work
You can save around $50 a week this way, and if you’re making meals at home anyway, you’ll always have leftovers. If you decide to splurge and eat out make you use a coupon!
Potential monthly savings: $100 to $200
Cancel meal kit subscriptions
Companies such as Blue Apron, Hello Fresh, and others will deliver recipes and pre-measured ingredients to your door. But U.S. customers of meal kit services pay 21 percent more than they’d pay at the grocery store for similar ingredients, according to a study by Lux Research. Don’t pay more for convenience.
Instead, look up meal kit delivery companies’ recipes online and purchase those ingredients on sale or at a discount grocer. Same meal. Lower prices. While you’re shopping, keep these six tips to reduce food waste and cut your grocery bill in mind and save even more.
Brew your own coffee
Stick with drip coffee when you go out, and on weekends, brew your own.
Potential monthly savings: $150 to $300
Avoid convenience stores and vending machines
You’ll nearly always pay a lot more for items you buy at a convenience store or vending machine. So, when you stop by the nearest 7-Eleven every day on your way to the office for a couple of donuts and coffee. Or slip a few dollars into the office vending machine for juice or soda and a mid-afternoon snack.
But it’s easy to tweak this spending habit and still enjoy life. Buy your pastries, soda, and snacks in bulk at the grocery store instead. Then raid your stash before heading to work or keep those items at the office for easy access to avoid hitting the vending machine.
Potential monthly savings: $100 to $200 a month for convenience
Find a cheaper gym
Your nearby gym may be the best but it costs $70 a month, you may want to find another location. You can go even cheaper with a big chain.
Potential monthly savings: Up to $100
Go green, reduce electricity and water
Approximately 12% of your budget is spent on utilities. Making sure your home is energy efficient may have a few upfront costs but in the long run, the savings can be hundreds of dollars. Reach out to your energy provider and see if they can give you a home audit, they will have suggestions for home improvements. Some steps are as simple as turning lights off when you leave a room or making sure you have Energy Star appliances and low-flow plumbing fixtures. The Department of Energy estimates savings of about 1 percent for each degree of thermostat adjustment per 8 hours
Potential monthly savings: $10 and more depending on the actions you take
Sign up for payment notifications
Ever paid a late fee for missing a payment because you forgot about the due date? Stop paying out late fees. Sign up to receive e-mail or text notifications that a due date is approaching for credit cards, utilities, and mortgage or car loans.
Here’s another tip for avoiding late payments: If payday arrives after a troublesome due date, contact the creditor and ask the agent to change the date so you can pay on time.
Allow yourself an indulgence or two
Maybe your thing is getting your nails done or going to a movie a couple of times a month. Find some other expense to cut so you can enjoy an indulgence here and there as a reward for all the sacrifices you’re making to pay down debt. Once you pay off your debt, you’ll have plenty of extra money for the luxuries you had to give up on your way to becoming debt-free.
Potential monthly savings: None, but it helps keep you sane and saving on everything else on the list.
Monitor your credit report
If you don’t check your credit report regularly, you could pay for that mistake one day with higher interest rates, lower credit limits, and less favorable financing. You can’t dispute errors that ding your credit or spot a fraudulently opened account if you don’t know those things exist. That’s why you need to order a copy of your credit report.
You are entitled to order one free credit report annually from each of the three major credit bureaus: Equifax, TransUnion, and Experian. Once you know what’s in your report, you can find simple, no-hassle ways to build credit so you can achieve a good score that gets you approved.
Now matter what kind of debt you have, Debt.com can help you solve it.
Article last modified on May 31, 2023. Published by Debt.com, LLC