Are you feeling the pinch of rising living costs? Don’t worry, you’re not alone. At the end of the third quarter of 2023, American households had $17.29 trillion in debt, and the average household debt was $103,358.
It goes without saying that many of us are looking for ways to save money and stretch our budgets. Although reducing household costs by cutting back on obvious expenses like dining out and entertainment is a good start, there are many other ways to cut household costs that you may not have considered.
1. Be a pro at DIY.
To become a DIY pro, you must invest time, effort, and willingness to learn. I’m not saying you’re going to be the next HGTV star. Even so, DIY can be very rewarding and fun. As a bonus, these DIY solutions can also save you money:
- Learn basic repairs. Make minor household repairs yourself instead of hiring a professional.
- Cook at home. Compared to eating out, preparing meals at home is much cheaper. Learn how to cook budget-friendly recipes.
- Upcycle and repurpose. Instead of buying new items, give old ones a new lease on life. DIY projects can add value to your home and make it more functional.
- Clean your home with homemade products. You can make your all-purpose cleaners with pantry items such as baking soda and vinegar. They’re very cheap and easy to make too.
- Embrace the sharing economy. Instead of buying new tools or equipment, borrow them from friends or neighbors. You can reduce transportation costs by using services such as carpooling and bike sharing.
To get started, follow these steps:
- Start small. You shouldn’t attempt to tackle a major project right away. Developing your confidence and skills will be easier if you begin with small, manageable tasks. If you want to start small, you can fix a leaky faucet or paint a small room.
- Do your research. Whenever you begin a new project, it is important to do your research and gain as much knowledge as possible. By doing this, you can avoid mistakes and ensure the success of your project. Videos, books, and websites are available both online and in libraries.
- Gather the right tools and materials. Your project will be much easier to complete if you have the right tools and materials. Before you begin, purchase everything you need from a hardware store or home improvement center.
- Watch tutorials and read DIY blogs. Tons of online resources are available to learn how to do DIY projects. Watch YouTube tutorials, read DIY blogs, and visit websites like Home Depot and Lowe’s for project ideas and instructions.
- Join a DIY community. You can find tips, advice, and inspiration from many DIY communities online and offline.
2. Hack your utilities.
American households spend an average of $6,888 per year on utilities, including telephones, internet, electricity, and gas. As a result, it is not surprising that utility bills represent a significant expense for most Americans. Fortunately, you can reduce your energy usage and utility bills by taking these steps:
Unplug energy vampires.
Despite not being in use, these electronics draw power. Therefore, unplug your chargers, game consoles, and TVs when not in use. According to the DOE, you can save up to $100 per year by turning appliances off regularly.
Invest in energy-efficient light bulbs.
In addition to using around 70% less energy than traditional bulbs, LED bulbs can also last up to 25 times longer than traditional bulbs. As a result, switching to LED bulbs saves you money both on your electric bill and on replacement bulbs.
Adjust the thermostat settings.
If you adjust your thermostat seven to ten degrees from its normal setting for eight hours each day, you can reduce electricity costs by up to 10% annually. It is easy to schedule temperature changes with a programmable thermostat so that you use less energy when you are not using it.
Don’t take long showers and fix leaky faucets. Also, replace your showerhead and faucet aerators with low-flow ones. When doing laundry and washing dishes, use full loads. And, if you want to water your plants or wash your car, consider collecting rainwater.
Protect your home from leaks.
Having air leaks can lead to your heating and cooling system working harder and consuming more energy. Keep an eye on your doors, windows, and vents to ensure that you aren’t paying for extra electricity. Caulk is a simple, low-cost fix for sealing these areas.
Get your chores done during off-peak hours.
Take advantage of off-peak hours to save money on your monthly electric bill. It is common for power companies to charge lower rates before 3 p.m. and after 7 p.m. So, you might get a lower rate if you’re doing laundry at night or running the dishwasher in the morning.
Make use of ceiling fans.
In hot weather, ceiling fans can keep your home cool, and in cold weather, they can keep you warm. As a result, you will use less energy while staying comfortable.
Negotiate a better internet deal.
Ask your existing provider about any promotions, discounts, and subsidies. Alternatively, you can negotiate a price match or a waiver of price hikes. To save even more, consider bundling your internet with other services, such as phone or TV.
3. Slash your grocery bill in half.
The average cost of groceries for one person per month is $250 to $550. And that’s not counting how much people spend on takeout or eating. Therefore, reducing your grocery bill can save you a lot of money.
- Plan your meals. Plan your weekly menu and stick to it. By doing this, you’ll avoid impulse purchases and maximize the amount of food you can consume.
- Embrace store brands. Many store brands offer similar quality at a fraction of the price of name brands.
- Buy in bulk. You can save up to 50% by buying in bulk.
- Use coupons. Make use of coupons and cashback apps to save money.
- Shop in season. You can often find cheaper and better-tasting seasonal produce. Visit farmer’s markets to find fresh, locally grown produce at competitive prices.
- Reduce food waste. Minimize waste by learning proper storage techniques, planning meals based on portion sizes, and composting food scraps.
- Get creative with food waste. You can make delicious and nutritious broth using vegetable peels and ends. Chicken bones can be used to make a delicious stock for soups and stews. To make French toast or casseroles, breadcrumbs can be made from even stale bread.
Together, these changes should result in a drastic decrease in your food costs.
4. Talk cheaply.
CNBC reported in June 2023 that the average monthly cost of a cellphone plan is $144, according to JD Power. Averaging over $1,700 a year, this is not a small expense. To reduce that cost, try the following:
- Enroll in autopay. You can save between $5 and $10 on your wireless bill with automatic payments.
- Consider bundling with friends and family. If you can involve a larger group, per-person costs will be lower. Verizon, for instance, offers a single line for $70 per person without taxes and fees under its “Start Unlimited” plan. A four-person plan will cost $35 per person without taxes and fees.
- Prepay your phone. If you switch to a prepaid plan or carrier, you can avoid the credit check and the costs associated with postpaid plans.
- Switch to an alternative low-cost carrier. Using a mobile virtual network operator (MVNO), such as Mint Mobile, Consumer Cellular, or Republic Wireless, is often much cheaper than using a large carrier, such as Verizon or AT&T.
- Change or remove your cell phone insurance. It is common for cell phone carriers to offer different protection plans. Almost any Bluetooth-enabled device in your home can be covered by extended warranties, insurance, and 24/7 tech support.
- Don’t upgrade your phone. The average smartphone lasts over two years, but many people upgrade after 24 months.
- Take advantage of discounts. You may qualify for a cell phone discount if you are a student, government employee, military service member, or employee of certain businesses.
- Use Google Voice. You can place calls and send texts for free as long as you use your Google Voice number to communicate with other U.S. numbers.
5. Reduce your housing costs.
Most likely, your biggest expense is housing. People earning below $50,000 spend at least 36.6% of their income on housing. According to financial experts, this is higher than the rule of thumb of 30%. Also, mortgage lenders prefer that applicants spend 28% of their pre-tax income on housing.
In some cases, reducing housing expenses could seem like a drastic measure. However, it is something worth considering and possible to do.
There are many ways for renters to save money on their rent. Here are a few:
- Find a roommate.
- Park for free instead of paying.
- In exchange for a break in rent, offer to do repairs yourself.
- If possible, consider moving to a cheaper apartment or region in your region or even the country.
Those who own a home have the following options:
- Your mortgage payment can be lowered by refinancing to get a lower interest rate.
- Get rid of private mortgage insurance. You will have to pay PMI if you did not pay 20% down when you bought your house. After 20% equity is reached, it’s removed from your account. Even if you haven’t paid down much of your mortgage, check your area’s home values. When they’ve increased, your home’s value has increased as well. You may request your lender to cancel your PMI if the value of the property is high enough that you have 20% equity.
- Consider renting out part of your home, or even the entire house, on a short-term basis.
The following options are available if you can’t refinance but are still underwater on your home loan:
- If you are experiencing hardship, contact your lender. This is usually done by freezing repayments, freezing interest rates, or paring back payments. Please note that interest will continue to be added to your mortgage.
- Interest-only payments. You might consider an interest-only loan if you’re looking for a more affordable mortgage than a fixed-rate loan. If you do not make principal payments at the beginning of your loan term, you will have a better cash flow from month to month.
- Move to a new home. The cost of living can be reduced if you move to a cheaper area or buy a smaller house. Giving up your car and walking to work may even be possible if you can move closer to work. For those retiring early or approaching retirement, this is especially important.
Why should I cut my household costs?
You can reduce your household costs for several reasons, such as:
- Saving for future goals, such as retirement or a down payment.
- Debt repayment.
- Preparing for unexpected expenses by creating a safety net.
- Stress and anxiety reduction.
- Financial freedom.
What are some challenges to cutting household costs?
- It can be challenging to change habits and routines.
- You may have to sacrifice or give up some things you enjoy.
- The process of researching and implementing cost-saving measures can take a lot of time.
What are some creative ways to save money?
You can save money around the house in a variety of creative ways. Here are a few ideas:
- Sell unwanted items. Declutter your home by selling unwanted items online or at a garage sale.
- Barter or trade, Barter or trade with friends and neighbors instead of buying new items.
- Do it yourself. Take the time to learn how to repair and maintain your house on your own.
- Grow your own food. You can save money on groceries by starting a small vegetable garden or herb garden.
- Get crafty. Instead of buying gifts and decorations, make them yourself.
How much money can I save by cutting back on my household expenses?
How much money you can save by cutting household expenses depends on your circumstances. Some people, however, report saving hundreds or thousands of dollars per year.
What are some government programs that can help me save money?
Many government programs can help you save money on your household expenses, such as:
- Low Income Home Energy Assistance Program (LIHEAP). This program can assist Low-income families with their heating and cooling bills.
- Supplemental Nutrition Assistance Program (SNAP). A grocery assistance program for low-income families is available through this program.
- Earned Income Tax Credit (EITC). For low- and moderate-income workers, this program provides a tax credit.
- Child Tax Credit. Families with children are eligible for a tax credit under this program.
Featured Image Credit: Photo by Vlada Karpovich; Pexels