23 Ways To Drastically Cut Expenses (+5 To Earn More Cash)

how to drastically cut expenses

Cutting down your expenses can be extremely easy and even fun. Granted, some of the points in my list will be easier to do than others, but once you start seeing results, you’ll get the motivation to do some of the more tricky or time-consuming ones.

So, without further ado, let’s see how you can drastically cut your costs. 

1. Track your expenses

The single easiest way to drastically cut your expenses is to TRACK them. This doesn’t just work with cutting costs. Are you looking to lose weight? Track your calories. Want to SAVE more money? Track how much you’re saving each week or month. 

By seeing clearly what your expenses look like and how much money gets funneled out of your wallet on unnecessary things, you’ll be able to nip them in the bud. Treat your personal finances like a business and make weekly and/or monthly expense sheets. 

You can use Google Sheets, dedicated tracking apps, or the easiest way – your banking app. Digital banks come 9 times out of 10 with a built-in robust budgeting and analytics tool that spits out detailed reports and charts on demand. 

Automatic categorizing makes tracking expenses even easier and almost effortless. And you get instant notifications whenever the card is used. This is especially useful if you have a joint account. 

2. Switch to a digital bank

We’re staying on the topic of digital banks as you can not only track your expenses in great detail with them but also save a pretty penny on monthly fees, transactions, cards, and other day-to-day banking fees. 

You see, big banks are there to rip you off at any corner and fleece you for all your money. Their business model relies on charging you exorbitant overdraft fees ($35), credit card fees, monthly ‘maintenance’ fees, transaction fees, and anything else they could think of.

RELATED: 6 Reasons Why Digital Banks Are The Future Of Banking

Digital banks, on the other hand, are also called challenger banks because they challenge the status quo by not charging monthly or annual fees, having free ATM withdrawals, cheap or free money transfers, and mostly offer debit cards so you can’t go into further debt.

If your credit history doesn’t look good, you can rebuild it by using credit builder programs that are often free. 

It’s still best to shop around for the best digital bank out there to find the one that’s best suited for you and that will help you drastically cut your expenses.

After you’re finished reading this article, make sure to check out the best digital banks in the US, UK, EU, Canada, Australia, and other territories around the world for the biggest savings. 

3. Move to a cheaper place

Okay, let’s see what we can do with our home that could save us some moolah. The first one is to try and move to a cheaper place. This could mean downsizing or moving to a less expensive area where rents or mortgages are more affordable. 

In this market, it wouldn’t be unwise to sell your expensive home, earn some extra cash for investing or saving, and buy a cheaper, dare I say, cozier place. This would be perfect for folks whose kids have gone to college, people who need extra money for retirement, or even couples without kids. 

During the pandemic, lots of folks moved out of big cities to buy homes in cheaper towns and states across the United States and even the world. If you can work remotely or are in retirement, your money could stretch a lot further in a more affordable country such as Portugal, Thailand, Mexico, and other nice places. 

4. Work from home

Working from home brings many advantages such as no commutes, which means no fuel or transportation costs, and more time—the time you could spend earning a degree, finishing a course, finding a side gig, spending time with family, pets, etc.

You also don’t have to spend money buying lunch, coffee, new work suits/dresses, work shoes; you get the drift.

It’s no wonder that workers are reluctant to return to offices with so many advantages. The only people that are happy to go back are probably folks with cramped or noisy apartments that make it uncomfortable to work from home. 

5. Move closer to work

If you’re unable to work remotely, you could opt to move a bit closer to your workplace. Well, only if you intend to stay at least a couple of years more there. If you plan on changing your job soon, it might be best to skip this step. 

Living closer to work also means lower commute costs and less time it takes to go to work and back home. You could also sell your car for more savings because you can cycle or walk to work or use public transportation.  

6. Move in with family

Yes, I’m taking it this far. I know this might sound terrifying to some of you, but it has many advantages (and disadvantages). If you get along with your family and they have a big enough place, this should be a no-brainer for you.

The sheer amount of money you could save by making this move is eyewatering. By staying only a couple of years in their space, you could save thousands or even tens of thousands of dollars. ($1,500 rent * 24 months = $36,000). 

This sum could be used for a mortgage deposit, investing in stocks or crypto, or even starting a new business venture. The possibilities are endless.   

7. Get rid of the second card (or first)

Cars are bottomless pits that can hinder your financial well-being. Just calculate how much you’re spending per year on maintenance costs, insurance, tolls, gas, tax, and of course, the lease. 

We’re talking about substantial costs here, especially if you have two cars. Getting rid of one will make a difference, and getting rid of both could be life-changing. 

This point goes hand in hand with working from home and moving closer to the workplace. If you eliminate the need for a car, you can easily get rid of it. 

Not having a car doesn’t mean you can’t use extremely popular carsharing services or Uber. If you don’t overdo it, you’re still saving a whole bunch of money.  

8. Focus on (free) experiences, not things

Some people go too deep while cost-cutting and become heavy-handed CFO’s of their lives and don’t authorize any random, useless, unnecessary expenses, transactions, or things. 

Cutting costs doesn’t mean that your life has to become a bleak dystopia. There is a time and place for thought-out treats that will satisfy you and your family. These should come in the form of experiences and not things. 

Experiences come in many shapes and forms and are often, contrary to popular belief, free. Unlike physical things that are almost always costing us money and that we discard once we lose interest. 

Research after research shows us that we cherish experiences far more, and they make us much happier than material things.  

9. Refinance your mortgage

Most homeowners aren’t aware that they’re sitting on a golden goose. You can shave off years and tens of thousands of dollars of your original mortgage by refinancing your mortgage. 

Find a specialist and talk to them about how to do this. They can advise you on how to pay less interest and even refinance for free. Paying closing costs is one of the reasons why homeowners don’t refinance. 

You could be paying thousands out of pocket for closing costs, but you could also, for instance, up the interest rate by half a point and not pay for closing directly.   

10. Buy in bulk/generic

We all have to eat, but food generates a lot of costs, and you can make significant savings if you buy food in bulk and opt for generic brands instead of costly brand-name products. 

You are mistaken if you think a branded product is ten times better than a comparable generic or own-brand product. Famous brands cut corners on products just like any other company in pursuit of profit. This was proven many times when recalls were made because of poor quality and health hazards.

An orange is an orange, and a tomato is a tomato, and so on. Don’t fall for marketing gimmicks that cost you money.  

11. Stop eating out/ordering food

We’re all social beings, and eating out is fun and can make us happy. It can also keep us poor. Doing simple math will show you that you spend way too much money on this. It’s money that could be spent elsewhere, saved, or invested.

You just need to find a cost-effective substitute for eating out. If you’re doing it to meet with friends, suggest a new kind of meet-up. It might shake things up a bit as well. 

If you don’t like or want to cook, it will make sense to learn how to do it. Everyone loves a good cook/chef, and this could open many possibilities in career, friendship, and especially love interest.   

12. Use coupons and discounts

People often look down on folks using coupons to do their shopping. But, guess what? It works. And you could be saving a considerable amount of money with this tactic.

There are also apps such as Revolut Shopper that automatically find you great discounts. 

Plus, you can get up to 42% cashback at retailers like Apple, MyProtein, and Nike.

13. Open a savings account and/or invest

This is a no-brainer. The best time to invest was 20 years ago; the second-best is now. Saving and especially investing, isn’t something that comes naturally to many people. It’s often perceived as hard, and it takes a long time to see the fruits. 

It still shocks me that financial wellbeing isn’t taught in school when we all know that it plays an enormous part in our lives. I’m a big fan of the idea that Bill Ackman suggested that “the government create and fund an investment account for every child ”that would have the initial investment of “$6,750 grow to $1 million in 65 years and $2 million after 74 years, assuming an 8 percent annual return.”

Of course, you don’t have to wait for the government to do that for you or your kids, although that would be smart of them.

Make the drastic cuts needed and start investing. Seek the help of a professional if you’re not sure what to do. They can save you time and money by pushing you in the right direction.

14. Don’t carry cash and cards everywhere

How do you spend money when you don’t have any on you? You don’t. If you can’t control yourself or you’re prone to impulse buying, simply stop carrying money around with you.   

15. Bring your food to work or skip lunch

Another food and another work-related item on our list. Who knew that something that’s supposed to generate money for us could be so expensive.

A vast majority of Americans don’t have a paid lunch at work. Therefore, we have three options: to skip lunch, bring it from home, or buy it. 

Skipping lunch is obviously the cheapest option, and some of us could certainly benefit from it in more ways than one 😉 For the rest, I propose to BYOL – bring your own lunch. Spend a fraction of money on making lunch at home as opposed to buying at work.

16. Don’t shop when hungry and bring a shopping list

All this food talk is making me hungry. This brings us to the next point on this list; don’t go shopping while you’re hungry. You’ll just stuff your trolley or basket full of stuff you don’t need because you can’t think straight. 

It’s also wise to bring a shopping list with you so you don’t veer off and spend more than you should. If you don’t want to make one from scratch, hundreds of premade and customizable lists are online. 

Find the one that works for you and stick with it. 

17. Change the insurance company

Unfortunately, insurance companies are a necessity even though they could make your life a living hell when something actually happens and they start playing their games and refusing to pay up. 

Do yourself a favor and look for a quote for all your insurance needs every time they’re up for renewal. You can potentially save hundreds of dollars by simply shopping around for a new insurance company.  

18. Change the utility provider

This one ties in with the previous one. Switching utility providers every so often might be a pain in the a, but it’s also a wise financial move, especially because these companies have excellent promotions for new customers. 

Avoid getting locked in a contract of more than one year, as this defeats the purpose. 

19. Change to an annual payment

If you’re anything like me, you’re paying for subscriptions and memberships on a monthly basis. This is a mistake, of course, that can cost you a lot of money. 

I made a switch a couple of years ago and started paying on an annual basis for everything I could and that I haven’t canceled already. 

You can usually pay 20-40% less if you opt-in to pay this way. Even if a business doesn’t advertise this discount, you can ask them for one, and they’ll usually cut you a deal. 

20. Stop upgrading phones

Phones are an integral part of our lives, and there’s no going back anymore. They have basically replaced computers for most of the things, and I know for a fact that a lot of people feel uneasy when someone, even a person close to them, holds their phone. 

Having this close relationship with your phone makes even less sense when we factor in just how often we swap them for newer models. Do we really need a new phone every year or every couple of years?

New phones don’t bring any new functionalities to the table, and it makes financial and ecological sense to stick to the current phone as long as we can. 

21. Combine cell phone bills 

Phones, again?! Well, many carriers offer family deals and excellent discounts for new customers. Shop around and find the best bang for the buck and make the switch. 

You can save a great deal of money and even get a new phone for free. Then sell the old one and tap yourself on the back.

22. Cut out nicotine, coffee, alcohol…

This point is easier to say than to do. Addictions are expensive, though, and we usually don’t spare money on them. If you find the strength to kick one of them to the curb, you’ll be not only healthier but also richer. Let’s calculate some of the savings here:

  • Cappuccino $4 x 300 days = $1,200
  • Cigarettes $8 x 300 days = $2,400
  • Sixpack $8 x 300 days = $2,400

It paints quite a picture, doesn’t it? I also think that the numbers above are very conservative and are on the low side. I rest my case. 

23. Get rid of unnecessary memberships and subscriptions

Aside from paying annually for subscriptions, you could also scrap them. At least the ones you aren’t using as often. Think about all the streaming services or cable that you’re paying for. Are they really necessary? 

How to earn more money?

We covered how to drastically cut expenses, but how do you earn extra money? Here are some suggestions.

  • Deliver stuff on your way to work with Roadie
  • Rent your home or a single room with Airbnb
  • Rent out your belongings with Fat Llama 
  • Teach or tutor online with TutorMe 
  • Become a freelancer with Upwork or Fiverr

The bottom line

As you can see, cutting costs doesn’t have to be hard. There are easy ways to cut expenses IMMEDIATELY. How many will you implement today, this week, this month, and this year? The more, the better!

P.S. Remember that any savings you make today multiply over time and earn compound interest if invested even in the worst-performing investment opportunity. You can reap amazing rewards from small, seemingly trivial, and insignificant actions.

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As a Current mobile banking app affiliate, I earn from qualifying purchases.