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Trying to save more money every month? Cutting expenses is an easy way to free up some money so you can achieve your other financial goals much faster. Find out how you can save more money by cutting your monthly expenses.

FREE Budget Binder

Importance Of Cutting Your Monthly Expenses

Cutting your expenses is important because the less you spend, the less money you will need overall to achieve financial freedom. You need to cut your expenses in order to achieve financial freedom more quickly. If you are used to spending frivolously, understand that embracing a frugal lifestyle will take time and won’t happen overnight.

To change this habit, you have to first make a budget and track your spending. If you’re just starting out, you can download my FREE Monthly Budget Worksheet

However, if you want something a little more sophisticated, you can get my Budget Template.  This is the template I use to save over 50% of my income every month.

Monthly Budget Template
My Monthly Budget Template

List Of Monthly Household Expenses

Most people go wrong when making a budget because they accidentally leave out monthly expenses that will require money at some point. That can throw your whole budget off and make you feel like a failure.

So to avoid making that same mistake, here’s a list of some common household expenses you may want to include in your budget:

Housing:

  • Rent or Mortgage
  • Property Taxes
  • Home Insurance
  • Common Charges or HOA fees
  • Maintenance

Transportation:

  • Car Note
  • Fuel
  • Car Insurance
  • Car Maintenance and Repairs
  • Parking
  • Taxis
  • Public Transportation Costs

Utilities:

  • Cell Phone
  • Internet
  • Cable
  • Electricity
  • Gas
  • Water

Food:

  • Dining Out
  • Groceries

Entertainment:

  • Going out with friends
  • Bars
  • Concerts
  • Movies
  • Vacations

Personal:

  • Hair Cuts
  • Hair Styling
  • Nail and Skincare
  • Dry Cleaning
  • Clothes
  • Student Loans

Health:

  • Health Insurance
  • Doctor Co-pays
  • Medicine
  • Health Club Dues
  • Life Insurance
  • Veterinarian and Pet Care

Gifts/Charity:

  • Gifts Given
  • Charitable Donations
  • Religious Tithing.

Savings:

  • Savings Account
  • Emergency Fund
  • Retirement Accounts
  • Investments

If you want to get some more ideas of household expenses to include in your budget, you can download my FREE Budget Categories List. It’s a list of over 80 different household expenses.

Budget Categories Checklist

This list is designed to cover as many personal budget expenses as possible; but don’t feel overwhelmed by its size, because not all will apply to you. This free list will make sure you don’t forget to include an expense in your budget.

Track Your Monthly Spending

After you make your budget, you need to make sure to track your spending regularly. Track your spending by keeping receipts and writing down all of your purchases. You cannot rely on your memory to keep track of your spending.

writing monthly expenses

Use this FREE Daily Expense Tracker to help you with that.  Print out multiple sheets (one for each spending category or sub-category).  Then put all your sheets in one place (like a binder or folder).

Daily Expense Tracker

If you don’t like to manually track your spending (like me), you can use a third-party website like Empower to see your spending all in one place. Empower is a FREE wealth management tool to help you get a better understanding of your finances.

After you link all your accounts, you can see all your accounts in one place to have better money oversight.

If you sign up today and link at least one of your investment accounts (with a balance of more than $1,000), we’ll each get $50. That’s FREE money for keeping track and staying on top of your finances (something you should be doing anyway)!

Once you make a budget and track your spending, it will become clearer to you where you can cut spending. Over time, being conscious about your spending is going to become second nature to you.

How To Drastically Cut Expenses?

cash envelope system
FREE Cash Envelopes found in my Resource Library

So you made your budget and tracked your spending for the month, now it’s time to start cutting your monthly expenses.  A lot of financial experts would recommend you review your budget and eliminate any small unnecessary expenditures—like your daily latte. However, if you want to drastically cut expenses, I think you need to first focus on cutting larger expenditures.

The reasoning is since most of your money goes towards the larger budget categories—such as housing, transportation, and food—those are the areas where you can make the biggest impact and recapture the most dollars.

For example, if I have allocated 35% of my budget to rent or mortgage, 15% to transportation, and 10% for food, that is 60% of my budget right there on only three spending categories.

Action Steps For Cutting Your Monthly Expenses

Short term financial goals

What are the three budget categories you spend the most in? At this point, it should be easy for you to answer this question because you can refer to your budget.

My Monthly Budget Template makes it clear how much of your income goes to what expense. It shows you exactly what percent of your income is being spent on each budget category. This makes it very simple for you to decide where you need to cut back at a glance.

By focusing on the larger parts of your spending, you are able to make the most impact when deciding to cut back. Keep in mind, I’m not saying you should not focus on the smaller categories at all, I’m just saying I would focus on cutting my expenses in my high-spending categories before I turn to cutting my small expenditures.

Cutting Monthly Expenses To Pay Off Debt

If you have a lot of high-interest debt, cutting your monthly expenses is absolutely necessary! You have to attack that debt and pay it off as fast as possible in order to be financially free.

The more you can reduce unnecessary spending, the faster you can knock out your balances and regain control of your finances. But knowing how much to put toward debt and which debts to tackle first can feel overwhelming—that’s where my Debt Payoff Spreadsheet comes in.

Debt Payoff Spreadsheet

This tool helps you organize all your debts, choose the best repayment strategy (Debt Snowball, Debt Avalanche, or a custom debt payoff plan), and track your progress so you stay motivated. Plus, you’ll see your exact debt-free date, so you’ll know when you’ll finally be free from debt.

Instead of guessing your way through debt repayment, use a system that gives you a clear plan to become debt-free faster.

free Resource Library

Summary

Cutting your monthly expenses is key to financial freedom. Start by making a budget, track your spending to identify where to cut back, and focus on big expenses before tackling smaller ones. If you have high-interest debt, reducing your expenses is even more crucial—because freeing up money to pay off debt faster will put you on the path to financial freedom.

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