How To Cut Costs At Home
Photo of jar of coins with “house fund” written on them by Sandy Millar on Unsplash
Updated 2024.07.24. This page contains affiliate links and this site earns from qualifying purchases made through these sponsored links.
Wondering how to reduce your living expenses? Cut expenses to the bone?
Let’s talk a little bit about how to reduce expenses and save money in your personal home budget.
It has been said by many writers that running a home is like running a business. In our experience we have found that is basically true. Likely you have also found some truth to that statement, which is why you’re right here right now.
Managing cash flow is imperative to every business success, likewise the success of a home.
Imagine your home has a cash reservoir.
Visualize your home's cash flow like water entering and exiting a reservoir.
Imagine your home’s reservoir size, the amount of cash ebbing and flowing around in it, being the focus of attention, and how the money flows into and out of that water tank, which is what you want to improve.
To improve the level of cash in the reservoir, you can do two things:
Increase revenue, increasing money coming in
Decrease costs, decreasing money going out
In this article, we are going to focus on the latter - decreasing your money going out.
Money going out is also called costs or expenses. You can decrease costs and expenses by streamlining your purchasing processes, reducing administrative costs on certain tasks and evaluating your spending, all of which we’ll discuss below.
When you decrease your costs, you reduce money going out and in turn, increase the reserve of money you have available.
So decreasing your costs should never be thought of as a sad or depressing thing - because when you do it, you are taking actions that lead to you getting to keep more of your money!
You getting to hold onto more of your money means you’re on the winning side of the game and that’s fun, because you’re winning.
So below, you will find 15 tips to reduce your costs at home:
How To Cut Costs At Home 15 Tips To Reduce Your Home Expenses text overlay photo of jar of coins with “house fund” written on them by Sandy Millar on Unsplash
1 - Evaluate every product you buy when it’s time to refill
See if your current vendor is offering the best price by reviewing at least three comparable products at three comparable vendors. Switch if you can get this need met for 5%, 10% or even 30% lower elsewhere. You usually can.
2 - Review your bathroom consumables for duplication
Open your medicine cabinet and notice if you have three sunburn remedies: one you use, two you don’t. Same with soaps, lotions, lip liners, hair sprays. Use up what’s there and when it’s time to replace, replace only the one you use.
3 - Shop grocery store clearance racks
You can get really good deals in the ‘end of day’ clearance sections. When products are being phased out or about to expire, they go on these shelves. You can often freeze or use them up in this time, while getting what you need for often more than half off.
4 - Go to the farmer’s market at the end of the day
Some stands deep-discount at this time to avoid taking it all home.
5 - Swoop in on seasonal overstock
Whole fryer birds are easy money after Thanksgiving. Yams and ham are bargain-bin priced after Easter. Frozen salmon can be found at low-low prices as stores make room for the upcoming run (starts in May). Get to know when stores have an over-abundance they need to desperately get rid of and fast, and you get yourself all the deals.
5 - Create a purchasing department browser tab
Put all your planned upcoming buys in a bookmarks tab on your web browser titled “Purchasing Department.” Let them sit in “the purchasing department tab” for at least 72 hours and up to 30 days. You often come up with cheaper solutions or find a way to use what you have in the interim.
Review these purchases at the end of the “review period,” and see what you can un-bookmark or still really need. Then, buy from an existing trusted vendor or the lowest cost vendor after cross-checking at least three potential vendors.
6 - Review service contracts and reduce over-servicing
Check your subscriptions. Do you have a subscription to three services doing about the same thing? Pare down. Do you have subscriptions to services offering lower cost in-house alternatives you are getting elsewhere? Condense and coordinate those parallel needs. This simplifies your costs and bookkeeping too.
7 - Automate repeat buys
Saving time means saving money. When possible, put consumables you purchase repeatedly on a subscription service.
This is a two fold benefit: subscribing to deliveries usually offers you a buying discount and it also reduces your home admin time spent making decisions on buying these same things repeatedly, allowing you to focus your attention on other more pressing tasks like increasing money coming in.
Dish soaps, shampoos, toilet papers, toothpastes - find out who allows you to subscribe and save, take advantage of the robot assistance available.
8 - Stop and shop your inventory
Before buying anything, check what you already have on stock. Your inventory represents assets, both sellable and consumable, that you pre-purchased to use as a resource. Always use up your inventory first, before spending to get more. If you don’t know what you have on hand, take an inventory of your supply and then buy.
It’ll save you so much time and money, make you more resourceful, reduce waste and prevent duplication (you’ll no longer buy because you didn’t know if you already had it).
9 - See if you can get it for free, borrowed or pre-owned first
Do you have some time before you need this product? Do you need to own it forever? Does it have to be new? If you can answer yes, no and no to these questions, see if you can find it for free first, then see if you can borrow and finally look for it on the pre-owned market.
People can be quite generous, giving away barely used, if used at all, items when the call comes. Some people keep items on hand for the sole purpose of giving it to others when needed or asked.
10 - See if you can fix and clean it
If a resource you purchased is broken, see if you can fix it before buying another. Sometimes just cleaning it is all that needs to be done to get something back in working order.
11 - Save it for next year
Seasonal “disposable” decorations such as wrapping paper, gift bags or even paper decorations for holidays don’t have to be disposable even if they cost next to nothing. Save these items for next year in a sealed bin and use them until they are no longer presentable.
12 - Coupon
Giant is a leader for grocery coupons. CVS and Target also do great coupons in our local area. All you need is the APP, you don’t even have to do printables.
13 - Join rewards programs
CVS ExtraCare Bucks is money. Giant Choice Rewards is money. Business rewards programs are micro-currencies existing between the store and their clients, and they do pay out, sometimes pretty lucratively.
Sign-up for the rewards program of the stores you frequently shop and enjoy your loyalty credits which you can use to purchase things you would have otherwise expensed, saving you actual cash.
14 - Use J-I-T Inventory process
JIT is a Japanese inventory management system which stands for “just in time” inventory. It means that you don’t buy new inventory until the day or morning before it is needed. This means keeping your supply shelves lighter, by not stocking up on deals for supplies needed months in advance.
In turn, it keeps more of your current cash on hand to be available when needed, rather than tied up in stock you won’t need for a while if ever.
If you don’t need it this month, write it down as a future need, research it, then purchase when you do. This keeps expenses low by preventing waste on pre-purchased inventory which may become obsolete (expires, goes out of production) before you can even use it.
15 - Bundle, bundle, bundle
Bundle your trips out to reduce energy costs. Bundle your purchases to as few stores as possible and take advantage of the larger savings and discounts available at higher tickets, stacking more rewards points and saving administrative time needed for bookkeeping multiple trips.
Now to answer these common questions:
Photo of stacks of 100 dollar bills in rubber bands on white table by Celyn Kang on Unsplash
How can I drastically cut household expenses?
Go on a spending freeze for one month and tabulate everything going out on a spreadsheet.
Review each item and ask yourself, is this a want or a need? Ruthlessly cut wants. Do a vendor check for every need and see if you can find a lower price by shopping elsewhere for your next purchase. Then shop elsewhere for that thing.
How can I cut expenses to the bone?
Below is a three month plan:
Sit down with your bank account and review the last thirty days of spending.
Remove things that are obviously extravagant from your budget, such as discretionary travel, restaurant meals, clothing if you already have at least 2-3 good outfits. Vacations, road trips, one off trips out to the store (you should be bundling your trips), dinners out, and shopping for fun, these all must go.
In the second month, review your spending habits in your checking account once again, and do a second round. Ask of each cost (money going out), was this a need? Can I cut it? Can I reduce it?
Luxury items you were unable to part with in the first round may likely get the second eye here and that’s the point - now that the big fish are out of the water, it’s important to acknowledge the truth: you can live without expensive bits and bobs. If your luxury item is a consumable good, use up what you have while you cross compare lower priced options to your luxuries that offer similar value.
At the end of the third month, review your expenses for that month, doing the same thing you did for the second month - cut out luxuries. If you were buying business items on your personal card, you may cut these now too. Now look at the last three months’ spending, and calculate your expenses for that quarter.
Compare this to your incoming revenue, notice if you have a positive or negative balance and whatever the case, see if you can do better next quarter - increasing your positive balance (your income retained) or decreasing your negative (your net loss).
Repeat this process for the next three month period and see if you can beat last quarter’s tally. Do this until you are satisfied with the level of austerity you have achieved and then maintain it for as long as conditions deem necessary.
Money saved and kept in your pockets can be a very motivating reason to enjoy cutting costs.
Implementing these tips can be fun and inspiring. Remember, cost cutting can be a fun adventure where you are earning hidden money and you get to keep it.
As a reminder, if you share a cost with another person, discuss your cost cutting decision with them first before taking the snip, to get them in on the process and on board. You may find willing teammates in the process.
All in all, each of these action items have the potential to improve your bottom line - that’s the reservoir's water level. The higher the reservoir’s water level, the easier it is to float during any economic condition.
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