You’re looking to cut back on spending, and one of the first things you decide to eliminate from your daily routine is picking up that fancy coffee drink on the way to work. Maybe you decide to cook more instead of taking the family out for dinner.
Sure, those are all great ways to start saving money and stop wasting it, but all too often we divert our attention into cutting back on the smaller things in life when we should be paying more attention to the bigger things, you know like cars and housing.
Figuring out how you’re spending your money (or wasting it) on some of the bigger expenses in life is likely where you can actually save the most.
This graphic from the U.S. Department of Labor shows how the average U.S. household spends their money. It’s no surprise that housing comes in as the biggest expense, followed by transportation and then food. These numbers have changed a bit since this graphic was created, but the proportions are still roughly the same.
So the question really comes down to, how can you save in the three areas where you spend the most money to ensure you’re not wasting it?
Here are some ideas, broken down into category:
Costs: According to the most recent labor department data, consumers spend 32.9 percent of their income on housing. Housing and what it costs to run your home is reportedly the biggest expense for most households and there’s a lot of things that factor into that cost. From your location, the cost of your home, your rent or mortgage payment to the money it takes to maintain your home, there are a lot of contributing factors. This handy Cost of Living Calculator might help you decide if where you’re living is your best choice financially.
Ways to save: Check out what it costs to live in other areas of your city. Maybe just taking the plunge and moving to a suburb that’s a little less expensive could end up saving you thousands.
If you own, it might be worth your while to shop around for a lower mortgage rate or term. If you have a loan for $100,000 and can reduce your interest rate by just 1 percent, you’ll be saving yourself over $9,000 in interest charges over the life of your loan.
If you’re a renter, try negotiating the cost of your monthly payment when it’s time to resign your lease.