9 Ways to Cut Down Your Monthly Expenses

Life is filled with big moments: obtaining a higher education, getting married, having a child, buying a home, or going on that epic vacation you’ve always dreamed of. And every one of these adventures is rewarding, fulfilling…and most likely expensive.

The solution isn’t to avoid them. Instead, the answer is to find ways to save for these milestones and moments within your normal monthly budget. The average American spends roughly 76% of their pre-tax income each year, according to the most recent figures from the Bureau of Labor Statistics. But even as households take care of utility bills and other necessary living expenses, there are still ways to save and make your money go further.

Here are nine tips to help you cut down your monthly expenses and save a little cash for the truly meaningful moments in life, like a wedding, a home, or even retirement.

1. Create a Budget and Stick to It

The first step in cutting down expenses is to 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 moves.

•  Gather all your income documents. Find where every penny of your post-tax income is coming from each month, from both your main job and any side gigs.

•  Create a monthly expense sheet. Find out where all your money is going: Write down every single thing you spend money on, from basic living expenses to student loan payments, entertainment to travel—including tiny recurring spends like afternoon coffee pick-me-ups.

•  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. Prioritize: If your gym membership provides mental and emotional health, keep it! But maybe you don’t need those personal training sessions? (Or the smoothie you treat yourself to after a challenging workout?) In many cases, it will be easier to reduce spending in a category, rather than eliminate it altogether.

•  Create a sustainable budget and stick to it. Once you decide on your non-negotiables and your “optionals”, create a budget you feel you can follow, that allows for a little leftover cash (even the smallest amount can add up over time). See how it goes for a month or two—was it easy, difficult but doable, impossible? If it felt impossible, take another look at the end of the month, and find other places you can adjust.

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 estimated 44.3 million Americans who are cord cutters (someone who quit their subscription to a traditional paid TV service) or cord nevers (those who never even bothered to subscribe to begin with), and save a little cash each month.

According to Consumer Reports , the average pay-TV bill is now nearly $110 a month. Compare that to the The Sling Blue service, for example, which allows users to stream more than 50 live tv channels for $35/month.

Another benefit of subscribing to one or a few streaming services is that you can better choose what you want access to—vs a cable bundle that might be filled with channels you never watch.

3. Learn to Love a Lower Temperature

Keeping your home toasty warm may seem nice, but if you turn down the heat in winter, you might save enough to knit yourself a sweater made out of dollar bills—turn it up in the summer, and you’ll be enjoying savings year-round.
According to the Department of Energy, those who adjust the thermostat by 7 to 10 degrees (warmer in the summer, cooler in the winter) for 8 hours a day can lower their energy bill by as much as 10% annually. A programmable thermostat makes it easy to control the temperature, raising and lowering it based on when you’re typically home.

4. Power Your Own Commute

The average cost of an American commute is estimated to be between $2,000 and $5,000 a year. Forget your car or public transportation, pedal power is really how you’ll save money on your commute. If it’s safe and close enough to bike, why not give it a try? Get to and from work on your own steam, and you could be banking some serious cash. (Heck—it may also inspire you to quit the gym. More savings!)

5. Make a Grocery List

It may sound too simple to work, but by making a list of what you need from the supermarket and sticking to it, you’ll lessen your chances of succumbing to impulse buys. While you’re shopping, keep an eye out for house brands, which are often just as good quality as national name brands, but less expensive (since they don’t spend money on advertising and marketing). The pricey picks are often put at eye level, so be sure to scan top and bottom shelves for undiscovered, inexpensive finds.

6. Go Halves on Your Next Meal

When it comes to eating at home vs eating out, making your own meal is almost always less expensive. Yet there’s something irresistible about dining out: according to the Bureau of Labor Statistics , the average American household spends an average of $3,526 per year on meals prepared outside the home. And those 2019 stats—the most recent—don’t even take into account the impact Covid-19 had on takeout. According to MarketWatch, food delivery apps more than doubled their business in 2020 over the previous year.

Restaurant orders tend to be large, whether you eat in or take out. Nevermind the appeal of appetizers and desserts—appealing add-ons you may not have room for, either in your belly or your wallet. To save money but still enjoy the pleasure of having others cook for you, consider ordering an appetizer portion or splitting an entree. And whatever you don’t finish, earmark it for lunch or dinner the next day.

7. Get Comfortable with Negotiating

Very few prices 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, feel free to walk away from your current deal and choose the best rate instead.

8. Keep Your Goals Private

In this age of accountability, you may feel inclined to tell everyone about your new budgeting habits—but in fact, it may actually be a better idea to keep it to yourself. A growing body of research has revealed that telling people about your goals can make you feel like you’ve accomplished them already, and actually decrease your action toward them.

Consider keeping your new budget goals to yourself for a bit. Once you’ve found a little success, decide whether you want to 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 may help reduce your monthly payment, potentially by lengthening your loan term and reducing your interest rate.

While refinancing may be helpful for some individuals, if you don’t want to lose out on federal loan benefits, this might not be the right choice for you. Other options include considering income-based repayment on your federal loans.

The Takeaway

There are many ways to cut down your monthly expenses in order to afford big purchases on your wishlist, like a wedding, a home, or a big-ticket vacation. The first step is to see how much money you bring in each month, vs how much you spend. From there, it’s a matter of prioritizing and compromising to save where you can.

One way to set aside money for future spending—and potentially watch it grow—is by opening a SoFi Invest® account. You can even manage your account and check balances from our convenient mobile app.

SoFi Invest®