How to Reduce Household Expenses?

Do you ever get to the end of the month and wonder where has all of my money went? Trying to reflect on the last few weeks of spending can be an overwhelming task without a mechanism that records your spending. Does it seem like the cost of everything has gone up? Do you ever have more days in the month left than you do have money to pay for expenses? If you have answered yes to any of these, then you are in the right place, keep reading. 

Why care about household expenses after all, you have to live, Right? If household expenses are not managed then there is no money left over for investing in growing wealth, saving for college, or any other large household expense. When expenses are out of whack there tends to be more stress in the household and not a lot of communication and that only compounds problems. When household expenses are in check there’s more money in the budget to do fun things like going on a vacation enjoying a nice meal at your favorite restaurant or maybe even going on a shopping spree. Who doesn’t love brand new clothing from time to time : ). 

Benefits of Reducing Household Expenses 

How Reducing Household Expenses can keep you out of Financial Trouble?

But when we fail to manage our expenses we run out of money and we turn to the only method of cash that we have, which is typically a credit card. Borrowing money on a credit card with such a high interest rate is not in your best interest if there is a desire to build wealth. If you are in a situation where you have to use the credit card to buy basic necessities such as food then that is a sign that you need to manage your finances better. This of course is assuming that you are working or have an income coming into your household. If there is an income coming in then you have to manage your household expenses to avoid financial trouble.

Getting the finances on track can be easy

If you are working or have income coming into home and are still having trouble with managing household household expenses, this may be a sign there is a mechanical problem with your budget or the lack there of a budget. It is important to manage your household off of a projected budget so that you know the target that you were aiming for, and then also you will know if you have reached or exceeded your budget. If you do not track it you will not know if you have reached your budget line item.

There is no way around this step. Operating your household expenses from a written budget is a proven strategy to ensure that you meet your financial targets and make sure you stay on track. If you need help creating a budget please click the link to register for our newsletter and with this sign up we will send you our free budget template.

Steps you can Take to Reduce your Household Expenses

1. First off, you can reduce household expenses by reducing unneeded items from budget.
   1. Let’s just face it there’s some things in our budget that cannot be eliminated. We need food, we need shelter, we need water, and we need clothing on our backs so we can go out and earn a living. Lets not forget, many of us also need transportation to get back-and-forth to work.
   2. Since these items are nice to have but rather necessities for daily living the only thing we can do is try to control the cost of these items by getting the best price we can for each one of these categories helps reduce household expenses.
   3. Action: Look at your budget or expenses for unneeded items to eliminate. 

2. Food is a big one. I love eating food, however there are many ways we can reduce our household expenses through food. Dining out is an expensive way to eat. However dining out can be done cheaply; however, the quality of food that you will eat at the lower price point is not very good for you and if you would like to eat a better quality food you will need to pay more money and that’s were dining out constantly is not feasible in maintaining a reduced household food expense. If you want ideas on how to reduce food budget check out this link here or we talk about effective ways to reduce the cost of food in your household budget.

3. Depending on where you live in the world, shelter can be very very expensive. Due to the high cost of shelter it is easy to pick on this category as the item that most would want to reduce in order to save money however having just any shelter isn’t the goal for most households. Having shelter in a desirable safe neighborhood is however desirable by most people in addition this just boils down to what home you can actually afford. As a rule of thumb, it is said that your housing expenses should be no more than 25 to 35% of your household income in order for you to have balance with your money. 

4. Utilities is another wild category in our household budget. Utilities can consist of  our electricity bills, our gas bill, our trash bill, our mobile phones, or our hard line telephones and let us not forget the Internet and cable. Nowadays cable TV has become less popular and you would think that that has driven to cause savings within the household expense; however, consumers have found an alternative to cable TV and this is streaming. If not managed we can have subscriptions for just about everything such as Netflix, Hulu, YouTube TV, HBO, and Starz just to name a few. If you do the calculations you may find that you have exceeded your normal cable bill with these subscriptions once you add them all up. 
   1. Action: Examine how much money you are spending with all your subscriptions. Are you spending more than you were with cable? Do you have all the subscriptions as well as cable? If yes, maybe you have found some cost savings in your quest for how to reduce your household expenses. Take inventory of the subscriptions you have and eliminate the subscriptions you do not use.
   2. Next, take a look at your electricity bill. You may want to examine how much money you are spending on electricity each month. Last year in October 2020 I noticed that my gas and electric bill went from $175 on average to $375 on average until approximately April 2021. This was pretty much consistent until I installed my solar system and with this new solar system I have reduced my bill by a couple hundred dollars per month.

5. Clothing is a necessary item in the budget. We need clothing to cover our bodies in order for us to go to work and sometimes we even need to spend a little more and buy business suits in order for us to work in our industry. If you have young children then you know just like myself that our children grow which seems like every day they cannot fit clothes anymore. I have children that I am constantly buying shoes for, so much so that I believe that the soles of the shoes fade away faster than an eraser on the back of a pencil. After investigating, I learned that my son uses his shoes to stop his bicycle Instead of using the intended bike’s brakes. People have found that shopping at secondhand stores is a great way to reduce clothing costs. I have not done this personally because I prefer to bargain shop and get good deals on my clothing. Action: You can pick up name brands with high-quality at a very good price at the factory outlet stores check online for  

6. Transportation is another item in our budget that seems to get out of control. Many of us drive a car that is way too expensive for our household budget. Right off the bat, if your car note is more expensive than your rent, then that is probably a sign that your car is too expensive. A great way to save money on cars is to drive a used car. Many times people want to drive a brand new car but little do they know that when they buy a new car as soon as they drive it off the lot the car drops in value like a rock. That is a hard hit to take when you do not have a lot of money so the alternative is to drive a car that is slightly used that has already depreciated in value. Many times when you drive a slightly used car you can get a better price because you can negotiate with a car dealer on the price of the car. If you commute a lot for work you may want to look at an electric vehicle. An electric vehicle in combination with your solar system can be a nice savings combo for your household expenses. This could save you thousands of dollars a year.

There are many items in our household budget, many of which are mandatory in order for us to survive. We need food, we need shelter, we need water, we need clothing, we need lights, gas, and we need transportation in order for us to go back-and-forth to work. However just because these items are required for everyday living does not mean they are non-negotiable items. They are not fixed cost items. We have control over how much we spend on these items. That is the beauty of shopping around. We as consumers can select the item that best suits our needs and our costs goals.

I encourage you to review your household expenses monthly and especially yearly for areas of elimination for cost savings. If you do not do it, nobody will do it for you. The business or a company you are subscribing to will not call you to save you money, you must do it on your own. If you do not have a Budget that you live on every month and that is the first step you must do in order for you to reduce your household expenses, if you need help with creating a budget make sure you subscribe to this newsletter and download our free budget template.