According to a report published by the Bureau of Labor Statistics, households in the US earned an average pre-tax income of $73,573 in 2017, $78,635 in 2018, and $82,852 in 2019.
But consider this: It turns out that in 2017, about $60,060 of that income went to expenditures. And as income grew in the subsequent two years, the expenses rose as well – to a tune of $61,224 in 2018, and $63,036 in 2019.
It seems Americans are overwhelmingly living from paycheck to paycheck. If you compare expenses across 2018 and 2019, households increased their education expenditures by 2.6%. Housing expenses, on the other hand, rose by 2.9%, food by 3.1%, and healthcare by 4.5%.
Whichever way you look at it, things are just not looking up for the bulk of the households. An economic advocacy group called Prosperity Now even did further research on the matter, and established that 40% of middle-class Americans are practically just one missed paycheck away from poverty.
5 Simple Tricks to Cut Your Expenses
Desperate times call for desperate measures, so we’ve compiled data from various financial reports to establish 5 of the best and simplest ways to drastically cut your expenses.
1. Find Out Where Your Money Is Going
Before you even start to come up with ways to cut your expenses, you need to figure out where your money is going. It’s only by reviewing your expenditures in detail that you can identify and prioritize the potential cost-reduction areas.
For the best possible outcome, you might want to track and record all your expenses across a couple of months. Compile your bills, receipts, credit card statements, and checkbooks. Leave no stone unturned. Not even the transaction charges that often accompany digital payments.
By the time you’re done with two or three months worth of expenses, you’ll have already started to accurately piece together your expenditure patterns. What’s more, you should be able to identify possible extras you could downscale to minimize your monthly expenses.
2. Drop Your Monthly Bills
It’s good to pay bills on monthly schedules. House rent, cable tv, internet, phone, insurance, you name it. That’s why we even collectively refer to them as “monthly bills”.
Here’s the thing about these expenses, though. You don’t always have to pay them separately and monthly.
While rent always remains fixed month-to-month, some of the other bills can be reduced by switching to annual payment plans. Your internet service provider, for example, possibly offers a much fairer rate if you choose to settle all the 12 months at once.
Speaking of which, you might want to work with an ISP that doubles up as a cable and phone services provider. This allows you to bundle the three bills into one cheaper bill.
Another bill that commonly supports bundling is insurance. By purchasing your insurance policies from the same provider, you get to take advantage of the huge discounts that come with bundled covers.
3. Be Your Own Health Club
While we’re on the topic of bills, you might have noticed that gym and health clubs are now a fad in the US. Everyone wants to belong to at least one – and the memberships come at a cost.
37% of them charge about $21-$50 a month, 20% ask for $51-$100 per month, while 15% fall into the $101-$250 bracket.
These costs seem negligible at first. But, when you consider the cumulative figures over a prolonged period of time, it suddenly turns into a monstrous bill.
A health club membership worth $100 a month, for example, translates into thousands of dollars a couple of years down the line.
Instead of paying for a full-time gym or health club membership, you could proceed with a cheaper, part-time schedule that gives you just enough time to work out when you’re free.
Alternatively, you could do away with the memberships altogether and shift your attention to outdoor adventures. Mother nature happens to offer a free gym with lots of fun activities.
You could, for example, go hiking, biking, skating, etc. Then to top it off, you could lift your own weights at home from time to time.
4. Buy Generic
Of course, you probably like Gucci, Fendi, Prada, Nike, Calvin Klein, Tommy Hilfiger, and the likes. Americans just have a thing for buying and rocking designer stuff – from clothing and shoes to accessories like sunglasses and jewelry.
You could argue that these brands make quality items. While that might be true, so is the fact that their comparatively high prices have more to do with the consumerism culture in the U.S.
Believe it or not, you can easily find yourself generic products that are just as well-made as the expensive brands. Take the time to check out the available alternatives in thrift shops, as well as online marketplaces like Amazon and Alibaba. You might discover generics that are arguably even better than their branded counterparts.
Most importantly, they are always much cheaper.
5. Save On Utilities
There’s no denying that utilities are essential. You can’t do without water and power.
However, that doesn’t mean settling for anything. You should at least try to minimize your utility bills.
One trick you could use here is replacing all your incandescent light bulbs with LEDs. Although their purchase price is usually higher, they ultimately make up for that with huge power savings and long-term durability.
You should also consider installing a programmable thermostat. This would allow you to effectively control your house’s heating system even when you’re away. Then to make the entire system more efficient, you should further seal all the crevices that potentially leak energy.
As for water savings, regularly inspect and repair leaky faucets, pipes, and toilets. Plus, remember to replace your dishwasher and shower systems with energy-rated fittings.
Get Everyone On Board
As you proceed to apply these strategies to cut your expenses, note that cutting expenses is not a solo journey. For the best results, you might want to bring all the household members on board.
In addition to the collective household expenditures, you could all track your individual expenses, and then use the findings to come up with effective cost reduction measures.