For many young adults, affording basic necessities can be a challenge.
If you’re underemployed, your living expenses (like rent) may be taking a huge bite out of your income.
After all of your bills are accounted for (especially student loans), do you find yourself struggling to make it to the end of the month with what you have left?
While we always recommend trying to earn more (as your earning power is unlimited), it can be worth it to look at what you can cut from your budget first. After all, cutting an expense can be done right now, and finding a side job or creating a side hustle might take time you don’t have.
Go through the following spending areas you can cut from your budget and evaluate how much you have left once you do.
1) Subscriptions of Any Kind
Did you see that one coming? Subscriptions, or recurring monthly payments that aren’t a necessary bill (such as utilities) are extremely harmful to your budget.
Why? Because they’re recurring! We’re not talking about one-time shopping sprees; we’re talking about possibly paying over $1,000 per year on various items.
Gym memberships and cell phone bills are classic examples of things you can cut from your budget – or at least, cut down on. When you look at it from a monthly payment perspective, it might seem harmless. However, I challenge you to total how much you’re paying per year. You may be surprised.
I was paying $90 per month for my cell phone at one point…until I added up how much that was costing me over a year ($1,080!) and realized I could be putting all of that toward my student loans instead. I promptly switched to Republic Wireless and have been paying almost $800 less per year for my phone.
It’s a good idea to comb through your expenses for any subscription services you might have forgotten about, too. Did you sign up for a free trial and forget to cancel the payment? Is there anything you’re paying for that you’re not using? Cut it!
2) Dining Out
Okay, I’m sure you saw that one coming. Hear me out – you don’t have to cut dining out completely, as long as you value it appropriately. That means if you absolutely love trying new cuisines or spots in town, or simply enjoy the art of it all, then maybe you should look at other spending areas to cut.
However, if most of your dining out expenses are occurring because of convenience, you have a different problem to address. Are you running out of time in the morning to throw something together for lunch? Or are you coming home to an empty fridge because you don’t have the time (or energy) to go food shopping? Either of these cases can lead to needless spending on food.
I’m not saying you need to become a hermit and turn down every single invitation to a meal, but carefully consider what’s causing your dining out expenses to be on the higher end, and get to the root of the problem.
There are a number of strategies you can use to combat this, like meal planning, buying (and cooking) in bulk, or even buying the same groceries week in and week out so you’re not faced with decision fatigue.
Either way, there’s no reason to be eating out more than you have to. It’s one of the categories in your budget that’s super easy to cut as long as you’re mindful about it.
3) Entertainment
You might think I’m asking you to become a hermit now, but the answer is still no. With so many free entertainment options available, you don’t have much of an excuse on this one.
I get that going out – outside of your house – is much more fun, but you pay the price when going to a bar, comedy club, sports outing, or concert.
I hardly ever pay for entertainment because, well, my group of friends is usually enough. That might sound lame, but we figure out other ways to have fun, whether that means having a board game night, going on a hike, hanging out in someone’s backyard near a fire pit, going to a festival, or holding a potluck.
Can’t come up with anything? Take the easy way out: identify what activities your family or friends enjoy doing the most, and create a frugal (or free) alternative.
4) Cable
Do I really need to elaborate on this? Most millennials I know hack cable with a variety of streaming alternatives like Netflix, Hulu+, and Amazon, or they use an over-the-air antenna or DVR.
For a full list of options, check out how you can give up cable and still watch your favorite shows.
5) Groceries
While cutting your costs on restaurant spending can be good, the best thing for almost everyone to focus on is groceries, since it’s an expense we all incur.
I mean this in the context of food waste and not paying attention to sales or deals. I’m not saying you have to eat a certain way (everyone has their diet preferences), but the key is to think about how you can still save within that context.
Do you shop with a list? Do you know sale prices well enough to compare across stores? Are you okay with trying store brands? Would you (or your family) benefit from a warehouse club membership? Do you use coupons? (There are e-coupons available if you hate clipping them like I do!)
If you’re someone who tosses stuff in the cart with no thought to how it’s going to get used before it expires, then it’s worth trying to plan out your shopping trips a bit more. Do a little meal planning in advance, go with a list (so you don’t buy anything you don’t need), and stick to sales (search through flyers).
Oh, and take this from me – cutting out snacks will do wonders for your bill. I’m completely guilty of loving cookies and chips, but snacks add up quickly. You’re better off putting that money toward filling meals.
6) Living Expenses
We said if you really have to, right? If you’re running the risk of being late on payments and can’t find the money in your budget anywhere, then you might benefit from thinking about cutting your rent in any way you can.
This might mean moving back home, downsizing, or getting a roommate. I know, it’s not fun. You may feel like you’re giving up a bit of independence (or status) by making these moves, but your credit score and financial well-being should take precedence.
I lived with my parents through college until I was 23 because rent is outrageous where I lived. Most of my friends are still living with their parents years later. If you have a good relationship with your family, it’s not anything you need to be ashamed of.
I managed to save a five-figure emergency fund because I only had to pay my parents hundreds of dollars for rent as opposed to thousands. It’s the financially sound move to make if you’re in dire straits – don’t let pride hold you back.
Remember, Cutting Back is Limited
Going back to what I said in the beginning, it’s useful to focus on earning more because you can continue doing so; with cutting back, you’re limited. After a few years of being super frugal, I realized there were no other places for me to cut back.
Where was I supposed to go? My income was the problem. I was only earning $13/hr and paying $600 in rent (my half) every month, along with $200 student loan payments, groceries, insurance, and gas. Those first two expenses wiped out one paycheck for me. Not good.
Once I learned the value in earning more, I never looked back. I’m still frugal, but in practical ways. I spend on my values, and that’s it. So if you’re looking for additional places to cut, then do away with anything that doesn’t matter to you, and work on finding balance with increasing your income.
There are plenty of ways to trim your budget without feeling the sting. The best way to do that is to get clear on how you want your money to work for you. Spend on what makes you happy, and forget the rest.
When you were in a tight spot with your money, what were the first spending areas you cut back on? Which ones did you refuse to budge on?
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I cut cable and never looked back! I pay $24/month for internet and that’s it! It’s amazing.
Nice, $24/month is a great deal! Definitely beats paying $60-$80 for TV, too.
Great list, Erin. We cut eating out when we wanted to spend less. Now that we need to hire babysitters more often when we go out, we tend to choose less expensive restaurants to balance it out. In the past I’ve also trimmed back our grocery spending and used stocking up on great sales to reduce that expense overall.
Stocking up during sales can be awesome. I know one of the grocery stores where I used to live has a sale on canned goods for a month, and there are always 10/$10 deals for pantry goods as well. I used to shy away from the upfront cost of stocking up, but it definitely evens out over time.
I agree with all of these! Dining out is the easiest thing to cut in my eyes, and it’s the first place we cut when our grocery budget runs short at the end of the month. Dining out is so expensive when you think about it. Unless the food is spectacular, it is hardly worth it to me.
Same, Holly. I don’t see the value in the process. Dining out involves a lot of waiting! I don’t even like cooking, but at least I have some control over how fast my meals get cooked, and what goes into them. Cleaning up isn’t fun, but the trade-off isn’t worth it to me.
Great list Erin. The first thing we cut back was eating out and things we simply weren’t using. It was crazy to look at the amount of money I was spending and not even using. On the flip side, the one thing we don’t budge a whole lot on is our grocery spending. It’s worth it to us to buy organic where we can so we allow for that in our budget.
So many people don’t realize what they’re spending their money on, especially if it’s been years since they checked their statements. Things like subscriptions can add up!
Agreed on groceries, though. Eating healthy is a good investment to make, and will likely save you money down the road.
Cable is always an easy target, because of the high cost and think of the time you will gain back, but most overall you will still have some cost due to wanting to keep high speed internet service.
“Think of the time you will gain back” – love that, Brian! You’re right, by cutting some things (like cable), you not only free up money, but your time as well.
I kind of hate that some package deals are better than getting internet alone. Hopefully we’ll see that changing in the future.
Great list you got there. We basically cut out our dining out and just cook everything at home. It’s one of the best and healthiest decisions we’ve ever made. We haven’t had cable service for a very long time. How I wish I could cut down my internet bill but there’s such a monopoly in my area, which is causing the internet to cost a lot.
Thanks, Allan! Yep, cooking at home is usually the way to go. I’m not a fan of cooking at all, but I would still rather do that than go out to eat. I hear you on the internet; where I used to live, we only had 2 providers (really, one, as the other wasn’t available everywhere), and it stinks not having a choice or even being able to negotiate with them.
I’ve cut or reduced each of these at one time or another. Subscriptions were the easiest, while entertainment and eating out were probably the hardest, because of the impact to social interactions.
It can be really difficult to balance entertainment and dining out within your budget. There are times I’ve hated saying no to friends, which is why I try to make up for it by going to all the “free” nights we have. I’m also lucky in that most people in my circle of friends love to cook, so there’s usually food around whenever we hang out!
Loving the new site design guys! I’m very impressed :)
For me it is most likely to be travel, if & when I ever need to cut back & also being conscious about spending any additional funds on investing and building up more cash..
I’d say spending on health is something I wouldn’t want to compromise on
Thanks Jef! I totally agree; health is not something people should be skimping on. It’s not fun to pay copayments, but the longer you put off an issue, the worse it can get. It’s not worth it. Interesting that travel is something you’d cut back on! I imagine that would be a hard decision for a lot of people to make, myself included.
Great list :) We’re doing pretty well in all of these categories. The only item left is our groceries and Mr. Smith is very reluctant to cut back on buying good food. Although, we do usually buy brand names and in bulk. The most expensive things are the fresh fruits and vegetables.
When you’re committed to eating better, it can be a little difficult to lower your grocery spending. If you haven’t (or if they’re available), I’d suggest checking out farmers markets and ethnic food stores, as their meat, veggies, and fruit can be cheaper. I’ve also heard Aldi has decently priced produce!
Nice list Erin…I have cut cable, reduced eating out and am looking into cutting my phone bill. I never realized how much I was paying for my bill until my friend saw me paying the phone bill and laughed at me. His cost was literally have the price! Hopefully I can switch over soon and save around $25 a month!
The grocery bill is next on my list to cut down on, I like to eat too much :(
Yes, the phone bill is a culprit for a lot of people! I’m just not attached to my phone enough to pay that much for it anymore. I work from home, so I’m typically on my PC or laptop anyway. Good luck on making the switch!
Well, if food is something you truly enjoy, then perhaps it’s worth reducing other areas to make room for increased grocery spending.
I just changed bank accounts and that is one way to realize just how many subscriptions you have when you have to update your billing info! It’s a great place to cut back!
Haha, very true, Heather! I just went through changing my address as I moved, and it’s definitely an eye-opener.
It’s easy for us to cut back on most of these things and we have gone through to do a major sweeping of some expenses like insurance and unnecessary warranties. We could stand to do more work in the dining out area and one thing I’ve found lately that helps combat that whole convenience thing is to meal prep in addition to meal planning. If I already have my veggies cut up for my omelette (who am I kidding – my veggie scrambled eggs), it’s quicker and easier than grabbing something more expensive.
P.S. I’m so in love with the new design here. Nice!
Awesome work! I basically have “back-up” meals that are super, super easy to make, this way I’m not tempted by alternatives. There are days when I forget to take something out of the freezer or whatever, but eggs are crazy easy to make and fill me up. I also make sure to make more when I do cook so I have leftovers on hand during the week.
Very good tips. We have tried to have our budget as lean as possible, so we don’t start getting extra things we don’t need.
Dining out/entertainment are things that people can really overspend on, without even realising. When you can blow a weekly food shop at one restaurant for one night, that can be financially dangerous for your budget!
Tristan
Oof, yeah, I’ve never done that, but I can only imagine. If I go out to eat, my general rule (for myself) is to stick to under $10 a plate. I also can’t help but compare the cost of making something to what the convenience is costing me – like paying $6 for an omelette when a carton of eggs costs less than that. (And that’s why I rarely go out to eat!)
Nice job, Jaime! That’s what I try and do, especially when the last thing I want to do is go grocery shopping. ;)
Great post Erin! I recently purchased a home so I have been working on cutting back my spending. I cancelled cable and netflix thus far. I have also started to bring my breakfast and lunch to work instead of purchasing. This gives me an idea of others areas that I can cut. I am considering renting a room in my house to cut some of my housing expenses.