5 Ways to Reduce Your Cost of Living
When you decide to start focusing on your finances, some expenses in life can instantly be carved out. Those flashy new shoes or excessive dining out are easy to cut. But what about when it comes to day-to-day living expenses? Here are five creative ways to reduce your cost of living.
What Is Cost of Living?
Before you cut back, it’s essential to know what your cost of living includes. Cost of living calculates the amount of money it takes to pay for the essentials in a particular location. These essentials may consist of:
And the cost of living for a particular area is generally tied to the wages for average work in that area. That means places with a higher cost of living will typically offer more lucrative jobs, and those who live in a lower cost-of-living area may earn a lower wage in comparison.
How to Reduce Your Cost of Living
Lowering how much you’re paying for essentials will directly impact your bottom line. Here are 5 of the best ways to do it.
1 Change Your Living Situation
For many people, the cost of monthly rent or your mortgage payment is likely among your highest expenses. So changing your living situation by moving to a less expensive home or rental or bringing on a roommate to split the bills can make a huge difference.
If you choose to move, consider your proximity to low-cost grocery stores and the length of your commute to work. Your plan could end up being a financial strain if you cause spikes in too many other areas.
2 Get Out of Debt
If you’re carrying debt, you’re probably paying unnecessary money toward interest each month. Calculate the fastest way to pay off debt and be realistic about how much you can afford to pay. Once you’ve tackled your debt, you can use that extra cash to create an emergency fund, save for a large purchase, or put toward starting a side hustle.
3 Shop Around for Insurance
There are savings to be had when it comes to home, auto, and health insurance. And since you’ll need to purchase insurance anyway, it pays to get the best price possible.
Sometimes all it takes is changing to another plan or carrier or raising deductibles if you have a solid emergency fund in place. Take time to research the best options in your area thoroughly. And make sure to consider any changes to the cost of insurance if you’re planning to move.
4 Cut Food Costs
Food is an essential expense, and while you’ll never be able to cut it from your budget entirely, there are ways to save money. It’s always wise to follow the sage advice of eating out less and learning to cook at home more.
But there are other options to save on food, like using an app like Ibotta to save money on what you’re already buying, limiting alcohol and other high-priced items, or scoping out your town for the best deals at restaurants. Small changes go a long way toward lowering your overall food expenses.
5 Rethink Transportation
Having a car isn’t cheap when you add up all the ownership costs, like a loan payment, insurance, gas, and maintenance. If your monthly costs are high, look at selling your car, buying a used car, or using public transportation for a bit. Even carpooling with co-workers a few times a week can have a drastic impact on your monthly transportation expenses.
The Bottom Line
There’s no reason to overpay, even when it comes to the essentials. So whether you’re planning to move, learning to cook, or selling your car, there are plenty of easy ways to reduce your cost of living. And what you do with the savings is ultimately up to you!
Brooke is a freelancer who focuses on the financial wellness and technology sectors. She has a passion for all things wellness and spends her days cooking up healthy recipes, running, and snuggling up with a good book and her fur babies.