How to Reduce Household Spending

Posted on by Forest in General, Opinion, Saving Money & Finances

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Of course we all want to know more about how to reduce household spending even if we are abundant in savings and have no debt. However most of us do have debt and little savings and household spending is a vital place to look to eeek a few dollars out of the budget.

I have gotten to a point where my budget is pretty simple. It basically involves rent, debt payment, savings and everything else but now it’s time to complicate matters slightly and it’s the everything else category that really needs to be honed down on and cut where possible. Even if it saves a single dollar a day that’s over $350 a year extra towards debt or savings. So it’s well worth it.

How to reduce household spending my method

Everyone has their methods and mine may not be 100% suitable for you but it’s worth reading over and amending to suit. This is a method I have used before to curb the spending but this time around my life is much easier so it should be a piece of cake to organize.

1. Tracking every expense: The first thing I do is spend a month or two tracking every expense. I write it all down and catalog by date. I used to do this at the end of the day from memory but am now getting more efficient and doing this as I go along during the day. This is a great first place to start. You need the data so you can start working out everything. You may also want to keep tracking to this level all the way through your household spending reduction project.
2. Killing expenses: Get a copy of any credit card statements, bank statements and your expenditure tracking list for the previous month or two. Lay them out on the table and get some highlighters. I choose a different color for different things such as red for things that can definitely be cut right away. Orange for things you could cut and blue for things that have to stay.
3. Re asses: After a month of reduction from this method you can go back to the lists. You will find you didn’t miss much so can start attacking more things you was unsure about cutting. This method can simply be done over and over until you are living as minimally as you feel comfortable.

Reduce grocery and essentials spending

One particular place that serious cuts can be made is in groceries and other essentials. We have a habit of visiting the same supermarkets and not really tracking prices. Sure we all cut coupons out of the Sunday papers but often you can find cheaper non coupon pricing. This is an area where tracking helps again.

If you get your receipts for every time you go shopping and start an excel chart tracking prices of all items you buy and where they came from then you will start to get a quick picture of what is cheapest and where. Simply using highlighting of different rows for different stores will give you an instant snapshot of where to shop for what items and you can plan your shopping in bulk visits or 1 different store per week. Ultimately it’s planning that will save the most in the long. Some people find with this method they can cut down quite a lot on couponing.

It also pays to test brands. You may find a coffee brand 50cents cheaper that tastes the same. Often Supermarket own brands are even made by the big manufacturers so it’s worth testing and seeing how things go.

How to let go of household expenses that can be reduced

Often things that people spend cash on are justified easily. Things like cable are almost justified as money savers by some. People say “we watch tv and it stops us going out”. Well instead of watching TV you could read a book or play a board game with the family.

Letting go of these expenses (cable, magazine subscriptions etc etc) is important to reducing your spending and is not that hard to do if you get in the right mindset. For example don’t cut the cable just yet but spend a week without turning it on once. Ask yourself at the end of the week if you really missed it. The answer is often, no! If you did then assess what you missed and see if you can at least reduce your package. Things like 3g mobile phone minutes and super speed internet are other things that can often be cut. Here in Cairo I have gotten used to using 1mb DSL with no problems at all and will likely not go beyond 2mb if I was coming to USA anytime soon.

What have you done to reduce household spending?

Well I have given you my ideas on How to Reduce Household Spending, now I would love to hear from you. I learn more from my readers than I could ever teach so I love your comments.

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