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How to save money on daily living expenses

Key takeaways

  1. Track spending and create a budget to establish baselines and targets. Then identify places to trim expenses

  2. Cut utility bills through habits like washing clothes in cold water, lowering thermostats when away, and using energy-efficient appliances and lighting

  3. Save on food costs by cooking at home, meal planning, using grocery apps for coupons, and minimizing food waste

When starting a budget, it can be surprising to see how much we spend on certain things. One of the benefits of having a budget is that it may prompt us to learn how to save money on daily living expenses.

In this article, we’ll look at practical ways to save money on gas, utilities, food and other expenses. Then we can direct that money toward goals like saving for a vacation or a downpayment on a house. Or we might decide to pay down debt faster, so saving on living expenses can help us save more on interest charges.

1. Track your spending and create a budget

Before you can start saving money on daily living expenses, you’ll need to know exactly how much money you're spending and what you’re spending it on. This is the first step to creating a budget. Start by reviewing a few months' worth of credit card and bank statements as well as receipts for cash purchases. Categorize these expenses and write them all down. Then, compare your expenses to your income.

Now you have a baseline for your spending and can set targets for what you want to spend in each category. This is your budget, and it can give you incentives for saving money and show whether you are meeting those goals. With a budget as your guide, you can dig down into different categories to find places to save by applying different tips and techniques.

2. Ease up on the gas expenses

Good driving habits can bring many benefits, like less wear and tear on your vehicle, fewer repairs, fewer accidents, possibly lower insurance premiums, and spending less on gasoline. Here are some simple ways to spend less at the pump:

  1. Slow your roll. Aggressive driving, like speeding and hard braking, lowers your gas mileage. Practicing safe driving may save you a speeding ticket.

  2. Turn the car off. For every hour that you idle, you waste between a quarter and half gallon of gas. Next time you find yourself waiting in a parking lot or stuck in traffic that's not moving, turn your car off. Turning it back on again wastes only a fraction of fuel compared to idling

  3. Avoid blasting the air conditioning. If you have to turn on the A/C, try not to set it to the coldest temp. Otherwise, try just rolling down the windows when it’s hot

  4. Let someone else drive. Consider alternatives to driving like public transportation, biking, and carpooling

3. Stop pouring money down the drain on your water bill

Installing energy-efficient appliances is one of the best ways to save money on your water bill. However, there are plenty of other smaller (and less costly) steps you can take that can also make a big impact.

  1. Keep your shower under 30 minutes. You don't need a long shower to get clean. Plus, shorter showers are better for your budget

  2. Go for low flow. Install low-flow showerheads and faucets. The EPA says an average family could save 2,700 gallons a year by installing low-flow showerheads. Since these water savings will reduce demands on water heaters, they will also save energy

  3. Run full loads. Skip the half-loads for dishes and laundry, you can rack up major savings by only running your dishwasher and washing machine when they’re full

Helpful tip: If you’re ready to switch to Energy Star appliances but are worried about installation costs, check out their rebate finder page and see how much you could save.

4. Save by taking charge of your electric bill

When we were kids, our parents told us to always turn off the lights when leaving the room. They were definitely on to something. Here are some other easy ways to save that would make Thomas Edison proud:

  1. Research on-peak hours for your area. On-peak hours are specific times during the day when electricity costs are elevated. You could save money by doing laundry or running the dishwasher during off-peak hours, when rates are lower

  2. Lower your thermostat when you leave the house. There’s no reason to keep an empty house toasty warm. Be sure to turn off or lower the A/C or heat when everyone’s out of the house to keep your bills down or look into a smart thermostat to do the work for you

  3. Lower the water heater temperature. If the manufacturer set your water heater’s temperature at 140 degrees, try turning it down to 120 degrees. According to energy.gov, this could save more than $400 a year

  4. Wash clothes with cold water. Forget the whole “wash colors in cold, whites in warm” thing—cold water gets the job done for all shades and can save energy

  5. Rely on natural lighting. Open the blinds or curtains and let the sunshine in. Save the lights for nighttime, rainy days or when you really need them

  6. Take advantage of energy efficient technologies. Science keeps developing new ways to cut our electric bill, like smart lights, LED bulbs, and smart thermostats. Make it a point to familiarize yourself with these products

5. Cut down on food costs

Food costs can be high, especially for a family, but there's still opportunities to save money on groceries and on food in general.

  1. Dine in instead of eating out. Cooking at home is one of the best (and often healthiest) ways to save money on food. Next time you get that terrible craving for tacos, look for recipes online and try making your own

  2. Plan ahead and do meal prep. Before you go shopping, do some meal planning. This encourages you to dine in and helps you buy only what you need for meals. It also helps with meal prepping—cooking several days' worth of meals at a time. For example, you prepare your lunches for the week, instead of needing to make lunch every day—or buying it at much higher prices

  3. Use coupons at the store. If you enjoy clipping coupons, have at it. But you also have the option of downloading apps that make couponing fast and easy. Many major grocery stores have their own apps. You also could download a coupons app or research a coupon site and start saving

  4. Try not to waste. American households lose countless dollars to food waste. Buy food that has a longer shelf life unless you know you’re going to use it. Frozen fruits and veggies are a great option and so are durable produce like apples or carrots

6. Consider more affordable forms of entertainment

Entertainment is a natural and satisfying part of life but keep your budget in mind when planning fun activities.

  1. Cut down on streaming services. Instead of paid platforms, use free ones like Pluto, Tubi, and Kanopy. They have plenty of content. Here’s a bonus tip: When you review your budget, look for any streaming services or subscriptions that you're not using and cancel them

  2. Get out and about. Consider all the things you could do outside the house that are both fun and free—or at least low cost. There are parks for walking or hiking, books and videos from the library, drawing and painting groups and classes, and much more

  3. Look at the community. Your community might provide wonderful entertainment options that your tax dollars help pay for, so you might as well enjoy them. You could be missing out on fitness classes and other recreation center activities, nature walks, and other programs at the library

Practicing these simple money-saving tips is an easy way to hold onto more cash and even boost your financial IQ. Then comes the fun part: deciding what to do with all the money you’ve saved.

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