Household Expenses & How to Manage Them
in Living by Mitch Alborn
The United States is home to individuals of all financial situations. While bills, budgeting, and saving may not be applicable to some, for most, they play a prominent role in one’s financial health. In 2021, the median household income was $67,541, but many fall below this income level. As prices on everything from basic household necessities to rent continue to climb, the importance of preparing your financial future becomes increasingly relevant. Throughout this article, we’ll be discussing a few small changes that nearly anyone can implement to reduce household expenses. While not every financial burden can be alleviated using these steps alone, for the vast majority of users, they can still help secure financial freedom for the future.
Save Money; use Spreadsheets
Although there are many online services that offer to track your spending habits for you, subscribing to these services is counterproductive. Rather than spending money to save money, take some time to itemize all your ongoing expenses using a spreadsheet. Both physical and digital spreadsheets will work, although the latter has the advantage of being “copy and paste” ready. Free services like Google Spreadsheets can be used to effectively track, manage, and monitor your spending habits over time. Using the spreadsheet data, you’ll be able to identify needlessly high and/or unnecessary household expenses, as well as budget consistently based on your habitual income.
Minimize Your Subscriptions
Many advertisements imply that the average person pays hundreds of dollars every year for subscriptions they don’t use. Such a blanket statement may not be 100% accurate, but it is likely that you’re at least overpaying for your current subscriptions. We recommend compiling all of your monthly subscriptions to see which types of services you use. If possible, bundle subscriptions to save money. You should also check to see if you can downgrade services (assuming you don’t need the benefits offered by the higher tier package). For month-to-month streaming services, consider only paying when you plan on using the service, rather than simply letting the subscription auto-renew. Most streaming services will save your profile information even if you pause the subscription, allowing you to cancel and renew at will.
Look for Promotions
Companies are always running promotions in an effort to entice new customers. If there are other people in your household, it may be possible to take advantage of these promotions (even if you already have the services!). Businesses often keep track of clients by their names, emails, or SSNs, rather than their addresses. This means that—despite sharing the same address—your spouse may be eligible for a “new customer” promotion at your existing address. Taking advantage of these promotions can save you hundreds of dollars per year! However, you will likely have to deal with the slight inconvenience of a brief break in service as your household expenses get switched over to the new accounts.
Plan Your Meals
The term “planning your meals” is often interpreted as planning meals you’ll make at home, but it can be applied to either home cooking or eating out. Depending on the meal in question, you may find that it’s cheaper to order from a restaurant than to make a dish yourself. However, if you do decide to opt for prepared food, you’ll want to avoid delivery. Instead of cutting into your savings by paying additional delivery fees, just go and pick up the food yourself. If you decide to stick with home-cooked meals, look online for bulk deals on foods you eat often.
Save & Invest
You should set aside—at least part of—the money you’ve saved on household expenses for the future. A high-yield savings account is a great place to start. While the interest you’ll earn in one of these accounts isn’t as high as alternative options, it’s an easy way to start your rainy day fund. You should continue to fund this account until you’ve saved roughly six months’ worth of expenses. After this is achieved, you can start allocating your money to investments.
Investing is an excellent way to earn interest, but investments aren’t instantly accessible like the funds in a savings account. However, assuming you’ve already accumulated roughly half a year’s income into your savings, this shouldn’t be an issue that prevents you from investing. Thanks to the invention of robo-advisors, even those who don’t care to learn the ins and outs of the stock market can start investing & earning with ease!
The Future Begins Today
While needless spending won't necessarily sink you below the poverty level, there’s no point in wasting money on trivial things. Using these tips provided, you should be able to cut your expenses and jump-start your savings! It’s unrealistic to expect instant results, but as time passes, the changes will become more and more noticeable. Even small adjustments today can offer big rewards later on, so don’t wait until it’s too late. Start building yourself a better financial future today!