7 Simple Ways to Cut Expenses at Home and Leave More In Your Bank Account


Many people are hobbled by expenses so high they are periodically forced to rely on debt. According to CNBC, just 39% of Americans can finance an emergency bill of $1000 without resorting to debt financing. Often, the most challenging step in cutting expenses so you can have more money in your bank account is just getting started. So in this article, I will go through 7 simple ways you can cut expenses, freeing you to achieve your savings goals.


#1 Record Your Expenses


Bill Gates is fond of saying that you cannot improve what you cannot measure. So your first task is to record your expenses over a month, to get a handle on the major and minor expenses you have. Whether you’re buying coffee or paying for the rent, you need to record every expense you have. Once you have accumulated a month’s worth of data, you can organize your expenses by category, such as groceries, mortgage, and gas, totaling each category.

Your task is much easier if you can use credit cards and/or bank statements. For example, if you are confident that all your expenses showed up in your credit card and bank statement in the last month, you don’t have to track your expenses for a month. You do, however, have to analyze your spending.

You should start using a spending tracker to help you keep track of your expenses. An app or digital program will allow you to automate your analysis. 


#2 Set a Savings Target


When you have a good idea of your expenses per month, you should organize them into a workable budget. You should show in your budget how your income supports your expenses, so you can plan your future spending and put a cap on potential overspending. You should factor in regular but not monthly expenses, such as spending on car maintenance. Set a savings target of 10 to 15% of your income. That target will tell you how deep the cuts you need to make are so that you can finally have more money in your bank account.

You should have both short-term and long-term goals. An example of a short-term goal (achieved over 1 to 3 years) is to have an emergency fund that will cover your expenses for the next 3 to 9 months if something terrible happens. An example of a long-term goal (achieved over four or more years) would be to make a down payment on a home or to save to remodel your home if you already have one. It is advisable to save funds for investment purposes. Markets can go down, but they are much like banks: you want to be invested rather than have cash in the long run. Set a savings goal for investing either in a plain vanilla index fund, a 529 plan, or an Individual Retirement Arrangement (IRA).

Start with small goals to build the habit of saving and spending wisely. Then, marginal gains over time will snowball into bigger ones.

#3 Make Cuts to Your Spending


The next step is where we start to make cuts to your fixed monthly expenses. Commit to the following:

  • Look for free or even low-cost events to attend to reduce spending on entertainment.

  • We all have some memberships or subscriptions we do not use. Cancel all such items, especially if they get renewed automatically.

  • Reduce the number of times you go out to eat, which should be pretty easy in a world of Covid-19. Look for “cheap eats” places to eat to limit your spending when you do go out. 

  • Learn to wait. If some purchase tempts you, cool off for a few days before deciding if you need to buy it. Small, random, unscheduled purchases add up to a lot of money.


There are cookie-cutter answers to where you should cut back. Of course, every person’s budget is different. But the important thing is to cut out froth, stop making spur-of-the-moment purchases, and keep your spending to the essentials. Let’s look at some of the low-hanging fruit you can pick to make deep cuts to your expenses.


#4 Earn Income from Your Home

The Bureau of Labor Statistics (BLS) 2020 Consumer Expenditure Survey found that Americans spent 34.9% of their earnings on housing. Housing is the single biggest expense that Americans have. Let’s assume that you find that you spend an equally large portion of your income on housing. To reduce your spending on housing, you could consider renting out a room or renting out the entire house on Airbnb when you’re away on holiday. Knowing where you spend the most helps you reduce spending and find ways of turning that spending into income. 3

#5 Reduce Transportation Costs

The Consumer Expenditure Survey notes that transportation is the second-largest expense that Americans have. Owning a car is especially expensive. Insurance, car payments and interest, gas, and maintenance are big expenses associated with car ownership. The AAA estimates that owning a car costs the average American $8,6000 per year, exclusive of parking. So think about selling your car and/or using public transportation (more). You could even share a ride with someone to work to reduce your monthly bill.

You can also use ridesharing services such as Uber, Lyft, and ZipCar to get where you need to go when you need a car.

#6 Reduce or Eliminate Your Debt


So many Americans are in debt that reducing expenses cannot be discussed without discussing debt. According to the Consumer Financial Protection Bureau, there are two ways to reduce or eliminate your debt. The first way is the high-interest method, in which you tackle your debt from the debt with the highest interest to the lowest. This puts the focus on your credit card and student loan debt, which typically have the highest interest rates in the average American’s loan balance. With this method, you want to get rid of the costliest debt first. It’s emotionally harder than the second way of reducing or eliminating debt, but it makes the most financial sense. The other way is to use the snowball method. Here, you start with your smallest debt and work your way upwards. The idea is that if you can get momentum going, you can build toward your biggest debts. The downside is that it often leaves your costliest debt untouched. 

#7 Reduce Spending on Food


The average American spends 11.9% of their income on food. Start cooking and preparing your meals at home, so you get away from spending money at fast food outlets and restaurants. We have already spoken about reducing the number of times you go out. You also want to buy nonperishable items in bulk and start using coupons. This is much cheaper than buying in small amounts. If you have space for a garden, now’s the time to start and grow some of the food you need.

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