15 Easy Cost-Cutters for Household Budgets
Reduce the Budget and Improve Family Finances with Simple Savings
Sep 25, 2009
When faced with financial challenges, families must often take a closer look at spending habits and the family budget. By looking at both discretionary (optional) expenses, and fixed or monthly expenses, families can make small changes across the board, adding up to big savings overall.
Reducing the Budget with Fixed Expenses
These simple savings ideas focus on lowering fixed or mandatory expenses, sometimes referred to as the “monthlies.”
- If the family carries a balance on credit cards, call each company and ask them to reduce the interest rate. By making the same monthly payment, the family will spend less on interest and pay down the debt faster. Learn more about reducing credit card debt.
- Thermostats should be set at 78°F during warm months and 68°F in the winter. This not only saves money, but is good for the environment, too.
- Reduce the grocery budget by switching to store brands for commodity products like paper towels, toilet paper, over-the-counter medications, canned goods and bread. Many store brands are actually made in the same factories as the name brands!
- Spend an afternoon researching phone, internet and television options to make sure the family is getting the best deal available. There are often incentives for switching companies or changing plans.
- Review other monthly expenses such as auto insurance, pest control and gym memberships. A little research may reveal less expensive options.
Cutting Costs with Discretionary Expenses
- Take lunch to work. It’s healthier and cheaper than most fast food.
- For family haircuts, visit a local beauty college instead of an expensive stylist. Customers who make this effort typically get great haircuts for a fraction of the price; and also get to help someone with her education.
- Instead of a movie, ballgame, or night on the town, invite friends to a day of volunteering on a community project. It’s a bonding experience that is fulfilling, fun and free.
- Instead of each person ordering a whole entrée at a restaurant, try splitting an entrée or appetizer, and supplement with a side salad or cup of soup.
- Order water instead of soft drinks or tea, and opt for dessert at home.
- When looking for new reading and entertainment material, get together with friends and family to swap books, magazines, games and DVDs.
- Visit the local library often for books, movies, and free family activities.
- Bartering for services (such as lawn care, car repairs, home maintenance, meal preparation, tutoring, babysitting, legal services, etc.) can help reduce costs and foster relationships. Bartering works well between existing friends and neighbors; or by visiting a bartering website [u-exchange.com].
- Visit the websites of products you love to look for coupons and discounts.
- Cook larger meals and freeze half for later; or exchange with friends to save money for both families.
Family Finances and Relationships
Many of the cost-cutting activities listed above involve friends, family, and neighbors. Financial troubles are no reason to become isolated or stop giving. In fact, solid relationships are a critical resource during difficult times; and a family’s values can bring everyone closer, even when money is tight.
Helping others and creating long-term family relationships are as critical to a family’s well-being as financial stability. Family finances can also bring the family together to work toward a common goal - such as with a family budget planning meeting.
Household Budget: Where NOT to Cut
When money is tight, it can be tempting to cut back everywhere possible, even some areas that impact the family’s long term financial health. But some cutbacks can be risky and harmful, and should be avoided except as an absolute last resort.
For example, health and life insurance may seem extraneous when writing the monthly expense check; but cutting these expenses is risky, and could expose the family to complete financial devastation if something were to go wrong.
Saving for retirement is another area that is tempting to cut back, particularly when a breadwinner notices the contribution being subtracted from his or her paycheck. It is unwise to forfeit retirement savings in pursuit of short-term goals, particularly when the contributions are deducted pre-tax from the paycheck, and when the employer provides some amount of matching.
Before cutting in these areas, think carefully and discuss the options with a financial advisor or accountant. It may be more effective in the short-term to consider a second job, a move, or another major change, rather than causing long-term damage to the family financial picture.
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