How To Cut Expenses: 13 Proven Strategies That Actually Work

Cutting expenses means spending less money on your monthly bills and purchases to free up cash for savings or other priorities. Instead of the typical advice to cut everything and live like a monk, I believe you should cut ruthlessly on things you don't care about so you can spend extravagantly on things you love.

13 Smart Ways To Cut Expenses (Without Ruining Your Life)

The strategies below start with the quickest wins that take just one phone call, then move into longer-term approaches that can save thousands over time. Each method is designed to cut costs without sacrificing the experiences and purchases that genuinely matter to you.

1. Negotiate your monthly bills with one phone call

The first thing everyone should do (and should be doing every year) is to negotiate their current monthly bills. Most people accept their bills as unchangeable facts of life. This is a huge mistake. Cable and phone companies employ entire retention departments whose only job is keeping customers happy with discounts that companies never advertise publicly.

Here's the exact script that works in most situations:

"I've been a loyal customer, but I'm getting quotes from competitors. What retention offers do you have available?"

Insurance companies operate the same way and will often match competitor quotes over the phone to retain your business.

One focused 20-minute phone call session can easily save you $200 to $500 annually across multiple services. You can learn more detailed strategies for how to lower your monthly bills and save hundreds every month, plus specific techniques for reducing your cell phone costs with these 12 ways to lower your cell phone bill.

How to realistically practice this:

The best approach is to set aside 30 minutes on a weekend when you can focus without distractions. You'll want to gather your most recent bills and prioritize the highest monthly expenses since these offer the biggest potential savings. Timing matters too; calling during business hours ensures retention departments are fully staffed and ready to help.

Remember to stay polite but firm during negotiations, and don't give up after the first "no" since representatives often have additional offers available. Keeping track of your savings helps build momentum for future negotiations and shows you the real impact of your efforts.

2. Cancel subscriptions you forgot you had

Right now, you're probably wasting an average of $200 a year on unused subscriptions and services you completely forgot about. 

Most people discover 3-5 subscriptions they forgot existed during their first audit. Use this brutal test for every subscription: If you haven't used a service in 30 days, cancel it immediately. Search your email inbox for "subscription" and "recurring" to catch hidden charges you missed on your statements.

You can dive deeper into strategies for living below your means while still enjoying the things you love.

How to realistically practice this:

Start by setting up a monthly calendar reminder called "Subscription Audit" for the same date a few times a year, so this becomes automatic. When that reminder goes off, you'll want to print out your last three credit card statements and use a highlighter to mark every recurring charge you see.

A simple spreadsheet works well for organizing this information; include columns for the service name, monthly cost, last used date, and whether to cancel or keep it.

3. Learn one skill that eliminates a monthly expense

Learning a new skill might sound like work, but the math behind it is incredible. If you regularly get haircuts that cost $40 each and go eight times per year, that's $320 annually. Learning to cut your hair eliminates this expense forever.

That $320 saved each year, invested at 7% annual returns, becomes over $54,000 in 20 years. You can apply this same principle to other high-impact skills that eliminate recurring expenses:

• Basic car maintenance saves hundreds on oil changes and simple repairs while teaching you about your vehicle.
• Learning to cook eliminates expensive restaurant meals and gives you control over ingredients and portions.
• Home repair skills prevent costly contractor visits for simple fixes like caulking, painting, or basic plumbing.
• Pet grooming can save $300 to $500 annually if you have dogs that need regular professional care.

YouTube has become a free university for practical skills. Focus on learning skills that save money monthly rather than occasionally. You can learn how to learn a new skill in 20 hours or less using proven techniques.

How to realistically practice this:

Begin by looking at your three highest recurring service expenses and considering which ones could potentially become DIY projects. You'll have the most success if you start with whichever option interests you most or feels least intimidating to tackle first.

Before jumping in, it's worth committing to 30 minutes of YouTube tutorials daily for a full week so you understand the basics before attempting anything hands-on. When you do buy tools, investing in quality ones upfront saves money compared to repeatedly buying cheap versions that break.

After three months of practicing your new skill, take time to calculate your actual savings since seeing those numbers helps maintain motivation for the long term.

4. Shop insurance rates annually like clockwork

Insurance companies count on customer laziness. They gradually raise your rates each year, hoping you won't notice or won't bother shopping around. This passive approach costs the average family $1,200 or more annually.

Break this cycle by shopping for insurance rates every single year like clockwork. Get quotes from at least three competitors and call your current provider with competitor quotes in hand. Many companies will immediately offer discounts to keep your business.

For detailed guidance related to specific types of insurance, check out some of my guides:

• Health Insurance for Self-Employed: A Beginner’s Playbook
• How Much Car Insurance Do I Need? (With Coverage Examples)
• How To Lower Your Car Insurance: Negotiate With These 4 Steps

How to realistically practice this:

The most effective approach is to mark your calendar 60 days before each insurance renewal date so you have plenty of time to shop around. Once that reminder hits, you'll want to gather all your current policies and set up a simple comparison spreadsheet that includes coverage details and costs for easy comparison.

Getting quotes from at least three major competitors online gives you solid negotiating power before making any phone calls. When you have those competing quotes in hand, printing them out and calling your current provider first often yields the best results since they'd rather keep you as a customer than lose you to a competitor.

5. Master the art of buying quality used items

Smart shoppers can buy used or refurbished electronics, furniture, and exercise equipment at 60% to 80% savings compared to new prices. Focus on items that hold their value well: kitchen appliances, tools, exercise equipment, and solid wood furniture.

You'll find quality items at thrift stores, Facebook Marketplace, estate sales, and Buy Nothing community groups. There's an important difference between being frugal and being cheap. Frugal means investing in quality used items that will last for years, while cheap means buying low-quality new items that break quickly.

Understanding the difference between frugal vs cheap thinking will help you make smarter purchasing decisions across all areas of your life.

How to realistically practice this:

Whenever you're considering buying anything over $200 new, it's worth spending just 15 minutes searching Facebook Marketplace, Craigslist, and local thrift stores for used alternatives first. You'll get the best results by focusing on items made by reputable brands that are known for their durability and longevity.

When you find something promising, always inspect items in person and test any moving parts or electrical functions to make sure everything works properly. Taking a few minutes to research the original retail price helps ensure you're actually getting genuine savings rather than paying close to new prices for used items.

6. Automate your way to lower energy costs

Small changes to your home's energy efficiency can cut utility bills by 20% with minimal upfront investment. Programmable thermostats are the biggest game-changer for most homes. Set them to adjust automatically when you're sleeping or away.

LED light bulbs cost more upfront but pay for themselves quickly. They last 10 times longer than traditional bulbs and use 75% less energy. Weatherstripping doors and caulking windows takes one weekend but saves money for years.

How to realistically practice this:

The easiest place to start is with a programmable thermostat if you don't already have one installed. Once you have it set up, you can program it to automatically reduce heating and cooling by 7-10 degrees whenever you're sleeping or away from home for more than 4 hours.

Your next step should be replacing the 5 most-used light bulbs in your home with LEDs, since these will give you the biggest immediate impact on your electric bill. A simple way to find air leaks is to walk around your house on a windy day to feel for drafts around windows and doors, then seal those problem areas with weatherstripping or caulk from your local hardware store.

7. Replace expensive habits with cheaper alternatives you enjoy

Changing your daily routine feels hard, but some expensive habits can be easily replaced with cheaper alternatives that you enjoy just as much. The key is finding substitutes that genuinely satisfy you, not forcing yourself to suffer through inferior options.

Look for replacements in these high-cost areas where alternatives often work just as well:

• Coffee shop visits can be replaced with a quality coffee maker and premium beans that pay for themselves in six weeks.
• Expensive gym memberships drain $50 to $100 monthly, but home workouts using free YouTube channels and basic equipment work equally well.
• Paid entertainment can often be replaced with free community events, hiking trails, library programs, and local festivals.

Choose replacements that align with your personality and preferences. If you struggle to work out by yourself, home workouts might not be the best option.

How to realistically practice this:

The first step is tracking your spending for one week to identify which recurring habits cost you the most money. Once you know your biggest expense, you can brainstorm three different cheaper alternatives that might provide similar benefits or satisfaction.

Rather than committing immediately, test each alternative for about two weeks to see which one works for your lifestyle and preferences. When you find a replacement that sticks, calculate how much you're saving each month and consider setting that money aside in a separate account so you can see the financial impact of your change.

8. Go generic on products where quality doesn't matter

Generic brands are often made in the exact same factories as name brands but cost 30% to 50% less. Focus on commodities where brand makes absolutely no difference: generic medications, cleaning supplies, pasta, rice, canned goods, and paper products.

Keep name brands for items where quality or taste genuinely matters to your enjoyment. Test generic versions of your regular purchases one at a time rather than changing everything at once.

How to realistically practice this:

Start by making a list of your 10 most frequently purchased items during grocery and household shopping trips. Before switching everything at once, it's helpful to research which categories typically show minimal quality differences between generic and name-brand versions.

The best approach is to try just one generic substitute per shopping trip so you can properly evaluate whether it meets your standards.

9. Batch cook your way to restaurant-level meals at home prices

Restaurants charge 3-5 times more than cooking the same food at home, but most people order takeout because they're too tired to cook after long workdays. Batch cooking on Sundays eliminates this excuse by preparing large batches of rice, proteins, and vegetables that you can mix and match throughout the week.

Brown-bagging lunch saves the average person $2,500 annually compared to buying lunch daily. Having ready-made meals prevents impulse purchases when you're hungry and tired.

How to realistically practice this:

Choose one consistent day each week for your batch cooking sessions and block out 2-3 hours when you won't be interrupted. You'll get the best results by starting with simple proteins like grilled chicken, baked fish, or roasted vegetables since these reheat well throughout the week. Investing in quality glass containers that stack easily in your refrigerator makes storage much more organized and appealing.

The foundation of good batch cooking is preparing large portions of versatile bases like rice, quinoa, or pasta that you can mix with different proteins and vegetables for variety. Building the habit becomes easier when you pack tomorrow's lunch immediately after finishing dinner each night.

10. Use the 24-hour rule for impulse purchases over $100

Impulse purchases destroy carefully planned budgets faster than any other spending category. If you see something you want that costs more than $100, wait 24 hours before buying it. This cooling-off period eliminates most impulse purchases that you'll regret or forget about entirely.

For purchases over $500, extend the waiting period to a full week. Keep a running list on your phone of things you want, then review it monthly to see what still matters to you.

How to realistically practice this:

The moment you want something that costs over $100, take a photo of it and add it to a "want list" on your phone along with the date and price. Setting a phone reminder for exactly 24 hours later gives you that crucial cooling-off period to reconsider whether you really need the item.

For bigger purchases over $500, extending the waiting period to a full week allows time to research alternatives and compare prices from different retailers. When your reminder goes off, ask yourself these three important questions: 

Do I still want this as much as I did yesterday? Can I afford this without affecting my other financial priorities? Will I actually use this item regularly enough to justify the cost?

11. Recreate cheaper versions of things you enjoy

Many expensive experiences you love can be recreated at home or in your community for much less money. Transform your garage into a game room or your backyard into an entertainment oasis, eliminating the need for expensive entertainment venues.

Host potluck dinners, game nights, and movie screenings instead of expensive restaurant outings. Find local bands at smaller venues or free outdoor concerts in your area.

How to realistically practice this:

Begin by listing your five most expensive entertainment activities and thinking about what specific aspects you enjoy most about each one. Once you understand what draws you to these activities, you can brainstorm home or community alternatives that provide those same satisfying elements.

The most effective approach is starting with just one area, like outdoor entertainment, and investing in creating a really great backyard space rather than trying to recreate everything at once. Planning themed events where friends can contribute different elements makes the experience more collaborative and often more fun than expensive restaurant outings.

After three months of focusing on home entertainment instead of going out, take time to calculate your savings since seeing those numbers reinforces how much this approach benefits your budget.

12. Automate your finances to eliminate decision fatigue

Setting up automatic transfers to savings accounts removes the temptation to spend money you shouldn't touch. Use direct deposit splitting if your employer offers it: 60% to checking, 20% to savings, 20% to guilt-free spending account.

Automate all your fixed expenses so you never pay late fees or waste mental energy on routine bills. High-yield savings accounts paying 4% to 5% annually grow your money while traditional big bank accounts pay almost nothing.

How to realistically practice this:

Your first step should be contacting your HR department to ask about direct deposit splitting options, or if that's not available, scheduling automatic transfers for the day after your paycheck typically arrives. 

Opening a high-yield savings account at a completely different bank than your checking account creates helpful physical separation that reduces the temptation to dip into savings for everyday purchases. Setting up automatic bill pay for all your fixed expenses works best when you schedule these payments 2-3 days after your regular payday to ensure sufficient funds are always available.

13. Track expenses for one week to find your biggest money leaks

You'll be genuinely shocked when you see where your money goes during detailed tracking. Most people have no idea how much they spend on small, frequent purchases that add up to massive amounts over time.

To start building a budget, write down every single purchase for seven full days without changing your behavior. Look for these common patterns that reveal expensive habits:

• Impulse purchases when you're stressed, bored, or tired can add up to hundreds of dollars monthly.
• Certain locations or situations consistently lead to overspending without you realizing it.
• Recurring expenses under $50 that happen monthly but cost over $500 annually when calculated.
• Daily small purchases like coffee or snacks that total over $1,000 per year individually.

This exercise typically reveals $200 to $400 in monthly spending that provides little value.

How to realistically practice this:

The most effective approach is using a simple smartphone app or notebook to record every purchase immediately when it happens, rather than trying to remember everything at the end of the day. Along with the amount and what you bought, it's helpful to note how you were feeling when making each purchase since emotions often drive spending patterns. Setting phone reminders every few hours helps you log recent purchases that might slip your mind otherwise.

When the week ends, spend some time categorizing your expenses and looking for patterns related to timing, emotions, or specific locations that seem to trigger more spending. Focus particularly on any recurring small expenses that surprised you, since these often add up to significant annual costs that are easy to overlook in daily life.

When Cutting Expenses Becomes Dangerous (The Line You Should Never Cross)

While cutting expenses intelligently can free up significant money for your priorities, some spending cuts create much bigger problems than they solve. Not all expenses should be cut.

Never cut expenses that help you make more money

Professional development, reliable transportation, and quality work tools are investments, not expenses. Skipping conferences, courses, or networking opportunities can cost you thousands in missed career advancement.

Reliable transportation to work is completely non-negotiable. A broken-down car costs far more than regular maintenance and loan payments when you factor in missed work, towing fees, emergency repairs, and rental cars. Quality tools and equipment make you more efficient and effective at your job.

Don't avoid necessary medical care or car maintenance

Skipping preventive medical care creates much bigger health and financial problems later. Regular checkups catch problems early when they're easier and cheaper to treat. Car maintenance follows the same principle.

Oil changes, tire rotations, and regular inspections save thousands compared to major repairs from neglect. The "pay now or pay way more later" rule applies to anything involving your health or safety.

Stop cutting expenses that isolate you socially

Eliminating all social spending damages important relationships and networking opportunities that often lead to career advancement and personal happiness. Wedding gifts, birthday celebrations, and occasional dinners out maintain crucial connections.

Professional memberships and industry events create networking opportunities that can transform your career. Complete isolation to save money usually backfires by limiting your income potential.

Don't obsess over small expenses while ignoring big wins

Micromanaging $5 coffee purchases while carrying high-interest debt makes no mathematical sense. The interest on $10,000 in credit card debt costs more per month than a daily latte habit costs per year.

Focus on these big wins that matter infinitely more than perfect budgeting on small items:

• Negotiating your salary can increase income by thousands annually with one conversation.
• Refinancing loans at lower rates saves hundreds of dollars monthly with minimal effort.
• Cutting significant fixed costs like housing or transportation creates permanent monthly savings.
• Eliminating high-interest debt stops money from hemorrhaging to interest payments every month.

Time spent obsessing over small expenses could be better used learning skills that increase your earning potential. You can learn more about how to live a Rich Life that balances smart money management with actual enjoyment by reading my article, How to Live a Rich Life (+ Rules That Will Help You Build Yours).

Build a Conscious Spending Plan To Cut Expenses Without Limiting Your Rich Life

The Conscious Spending Plan gives you a framework for cutting expenses strategically rather than randomly slashing everything that brings you joy. Instead of traditional budgets that make you feel guilty about every purchase, the CSP helps you identify precisely where to cut so you can spend more on what you care about.

Start with four simple spending categories that actually make sense

Traditional budgets tell you what you can't do and make you feel guilty about every purchase. They focus on restriction instead of intention, which is why most people abandon them within weeks.

My Conscious Spending Plan divides your money into four intentional buckets that make sense: Fixed costs should be 50% to 60% of your take-home pay, investments should be 10%, savings should be 5% to 10%, and guilt-free spending should be 20% to 35%. These categories smash traditional budgets and set you up for success, instead of failure from traditional, restrictive budgets.

The four categories explained

Fixed costs include rent, utilities, insurance, minimum debt payments, and subscriptions. Investments go toward your 401k, Roth IRA, and other long-term retirement accounts. Savings covers your emergency fund and short-term goals like vacations or home down payments. Guilt-free spending is meant to be spent without any guilt on things you genuinely love and enjoy.

Focus your expense cutting on fixed costs first

If your rent, utilities, insurance, and other fixed expenses exceed 60% of your take-home pay, that's where you need to focus your cutting efforts. I've worked with couples spending 91% of their income on fixed costs, leaving them effectively broke despite earning good salaries.

These are the expenses that matter most because they happen automatically every month:

• Housing costs that eat up too much of your budget may require downsizing or refinancing to create breathing room.
• Insurance premiums that haven't been shopped in years often hide hundreds in potential annual savings.
• Subscription services and memberships that auto-renew annually without your notice.
• Minimum debt payments that could be reduced through refinancing or debt consolidation strategies.

Cutting $200 from your monthly fixed costs has a dramatically more significant impact than eliminating coffee purchases for an entire year.

Why this couple stayed broke despite earning good money

Clara and Devin, a married couple with three young kids, thought their biggest problem was eating out too much. They were spending $30 per month on dining out, which felt like the prominent place to cut expenses. But when we dug into their numbers, the real issue became clear; their fixed costs were consuming 74% of their income, leaving almost nothing for savings or investments despite earning good money.

Automate your system so you never have to think about it

Set up automatic transfers so your paycheck gets divided into the four categories as soon as it hits your account. Use direct deposit splitting if your employer allows it, so your money goes directly where it belongs without you ever touching it.

Automate all your fixed expenses so you never pay late fees or waste mental energy on routine bills. Keep your guilt-free spending in a separate account so you know exactly how much you can spend without affecting your other priorities.

Design your guilt-free spending around your actual values

This is where you get to spend on whatever makes you happy: travel, dining out, hobbies, or expensive coffee. Your Rich Life should reflect your personal values, not society's expectations or your friends' priorities:

• Some people love expensive cars and prioritize transportation as a major spending category.
• Others prefer experiences like travel and allocate larger amounts toward vacations and adventures.
• Many people want to spend on their hobbies, family activities, or personal development rather than on material possessions.
• Your preferences might include expensive coffee, designer clothes, or premium gym memberships that others consider wasteful.

I spend thousands annually on travel with friends and personal styling, but I drive a 15-year-old Honda Accord because cars don't matter to me personally. The beauty of the Conscious Spending Plan is that it funds your actual priorities instead of making you feel guilty about spending on things you love.