12 Tips For How To Drastically Cut Expenses To The Bone

If you’re finding it challenging to make ends meet, and saving money seems impossible, it’s time to learn how to drastically cut expenses. Try this when your current budget isn’t working and you have to make major changes to your finances.

While these aren’t necessarily extreme ways to save money, they might push you out of your comfort zone. Don’t be afraid — you can do it!

Why you might need to learn how to drastically cut expenses

A need to drastically cut your expenses might stem from several changes in your circumstances. Here are some of the big reasons people tend to look for ways to spend less each month.

Job loss

One of the big catalysts for starting a new, bare-bones budget is a sudden loss of income. If you’re someone affected by layoffs in your industry or company, it’s not easy to replace that income quickly.

Losing your job is a stressful and painful experience. But figuring out how to drastically cut expenses will make it easier. The less you have to spend to “get by,” the less pressure you’ll have to find employment right away.

And if you’ve been in a dual-income household but are reduced to living on one income, slashing your expenses is key to keeping your sanity.

New larger expenses

Sometimes your need to drastically cut expenses isn’t because your income went down but because other expenses appeared. Perhaps you’ve recently taken in an elderly family member with no savings, and it’s straining your budget. Or you’ve moved into a larger home with much bigger costs for upkeep.

Whatever the cause for some larger expenses in your life, typically, you’ll need to cut costs elsewhere to make up the difference.

Saving for a major goal

Have you been dreaming of taking a six-month RV trip with your family? Perhaps you’re figuring out how to save up for a house. Or maybe you're starting to think seriously about your child’s future education plans.

These are worthy goals, but they can be really expensive. Learning how to cut expenses to the bone could be key to accomplishing these other big financial goals.

Every $100 you can cut from your monthly budget is another $100 you can put into a high-yield, interest-bearing account for your largest goals.

New career training

What if your big goal right now is to change careers? There are many jobs that pay well without a degree.

But most career changes will require some form of training. When you cut expenses, you might put a new and more fulfilling career within reach.

Here’s how reducing your spending will help. For one thing, it could help your family get by on less or no income while you complete job training.

Taking an unpaid internship could be another part of the process, and spending less month to month can only help your situation.

Needing to pay off debt

Let’s not forget one of the major reasons many people embark on the task of cutting expenses to the bone: debt. There’s a reason why the “debt-free scream” on Dave Ramsey’s podcast is such a popular segment. Millions of Americans are in debt and sick of it.

A simple way to pay off debt faster is by getting rid of all unnecessary expenses. While it can be a challenge, it can also help you get to where you want to be financially.

12 Tips for how to cut expenses to the bone

Take a look at the following strategies for how to drastically cut expenses. Some people will be able to implement nearly all of them.

However, you should at least select two or three to focus on to start.

1. Track your expenses

Does tracking your expenses on its own actually cut expenses? Maybe, but the point is to draw your attention to your expenses first. You can’t know whether you’re actually spending less without first establishing a baseline spending level.

The Consumer Financial Protection Bureau (CFPB) recommends tracking what you earn and spend for an entire month. Then, once you know your current spending levels, you can set a goal to reduce them.

This exercise doesn’t only include your bigger expenses like rent or car payments. It forces you to pay attention to even the smallest things, like a morning latte or an ATM fee.

2. Create and follow a budget

Step 1 is essential to step 2. You can begin to follow a budget once you have an accurate picture of your spending. If you really want to cut expenses, you’re going to need a budget.

Perhaps you could try one of the best budget templates or tools available. Since your goal is to drastically reduce your spending, you want to create a bare bones budget.

Your bare-bones budget weeds out all non-essential spending. You’ll quit spending money on luxuries (for now) and put the difference toward your other financial obligations.

3. Make a debt payoff plan

When you’re learning how to cut expenses, consider your debt situation. If you’re carrying a lot of consumer debt, take this opportunity to cut expenses.

Although paying off debt might require you to give up more of your income each month, once the debt is gone, your overall expenses decrease. So this is more of a long-term perspective: create a debt payoff plan to save more of your money in the future.

Popular methods include the debt snowball worksheet method and the debt avalanche. The goal is to become debt-free, and then you’ll stop having to send creditors payments each month.

4. Reduce how much you drive

If you live in a city or region where public transportation is possible, that could save you money on car expenses. Even better, you could start walking or riding a bike anywhere within range to improve your health and your budget.

Driving less isn’t always a possibility for everyone (for instance, if you live in a rural area, of course, a car is a virtual necessity). But even then, you might try to cut back on the number of trips you make into town by batching errands into one day a week. Get creative about your normal routine, and see how it saves you money.

5. Weed out your subscriptions

If you haven’t heard this tip before, it’s a great one to try when you’re first cutting your budget down to necessities. Do you really need that gym membership, magazine subscription, or even your Netflix or Hulu account?

A lot of people go through their recent expenses and find unpleasant surprises: they’ve been paying money every month for services they don’t use. Even if you are using a subscription, unless it’s a necessary expense, cancel it.

6. Quit using credit cards if they cause overspending

For many people who are trying to make major changes to their spending habits, credit cards are a pain point. Sometimes credit cards make us feel like we have more money than we do, so it may be wise to ditch the plastic.

You might be someone who's learned how to use credit cards wisely (paying them in full every month). But research by the Sloan School of Management at MIT has shown that it's easier to spend money with credit cards.

Swiping a credit card or using instant payment technology could cause you to break your budget. Plus, for those who are working to pay off credit card debt, adding more debt to the total goes against logic.

If you’re really trying to drastically cut expenses, giving up credit cards and other click-to-pay options could save you money.

7. Minimize utility bills

Something many of us don’t think about as an opportunity to save money is our utility bills. Taking the time to make a few simple changes around your house could save money in big ways.

Turn off lights, use your washer and dryer less, and make other small changes that affect your bill.

Try these tips for how to lower electric bill expenses. You won’t regret it, as you can put the saved money toward debt payoff, saving for a future goal, or whatever you need.

8. Get a roommate

It’s not such a crazy idea: by getting a roommate, you could save a lot of money. Think of it—housing is one of the biggest budget items for most people. So you could find out how to drastically cut expenses with just this one change.

According to Pew Research Center, in October 2021, almost half of Americans said affordable housing in their area was hard to find. Rents and mortgages may be out of control, so splitting the costs with someone is a smart solution.

Getting a roommate that pays rent is the first step if you want to try house hacking, and it’s a legitimate way of reducing your expenses. Renting out a room in your house could put hundreds back in your pocket every month.

9. Consider a move to a cheaper residence

Similar to the idea of getting a roommate, moving to a different residence addresses a big expense. When you want to drastically cut expenses, housing costs are a great place to look since they make such a big dent in your budget.

Discovering how to find cheap apartments may not be easy, but it’s something to consider. If you’re in a really extreme situation, relocating to a more inexpensive part of the country (or world) might be an option as well.

10. Shop for better insurance rates

You could reduce spending by addressing your insurance rates—adjusting your policy to get lower premiums will save money every month. You likely have several types of insurance, such as renters or homeowners insurance, life insurance, and auto insurance.

While it’s typically not a good idea to get rid of insurance, you might be able to lower premiums without sacrificing coverage. Pay attention to how lowering premiums impacts your benefits, and if it’s reasonable, you can do that for a few months or longer while cutting expenses.

11. Use grocery apps to cut grocery expenses

Related to the concept of eating more at home, be sure to maximize your savings by using tools like grocery apps. In addition to making the cheapest grocery list, apps can give you coupons or cash back on your purchases.

One caveat is to avoid buying items just because they’re listed with a coupon or bonus points on the app of your choice. If it’s not a food you need (or will actually eat), you aren’t saving money by getting it.

12. Eat at home instead of dining out

Of course, we’ve all heard that it’s cheaper to eat at home than eat out at a restaurant. There are exceptions, but you can nearly always get more food for less money at the grocery store.

Interestingly, the Bureau of Labor Statistics Consumer Expenditure Survey found that the average U.S. household spent $3,030 on food “away from home” while they spent $5,259 per year on food at home. You can likely keep more of your money by eating at home.

Be sure to also shop at inexpensive supermarkets like Aldi as well to get the best deals on your groceries. Do your food and grocery shopping on a budget and cut back on dining out, at least for a little while.

Expert tip

There are a lot of reasons, such as job loss or career training, that you might need to lower your expenses. Fortunately, by understanding where your money is going and minimizing costs, you can make your budget more reasonable. Remember that there are many ways to cut costs, so the smart thing is to use several ideas to get your finances where you want them to be!

Tips to be creative in earning more!

There are plenty of other ways of cutting expenses, so look clearly at what you’re spending and ruthlessly drop what you don’t need. But it’s also important to try to earn more money.

There’s theoretically no limit to how much you can earn, but there are limits to how much you can cut expenses.

Start a side hustle

If you have even a little bit of extra time in your schedule, you may want to start a side hustle to help you with how to drastically cut expenses. This can be using a skill you’ve forgotten about to create a product or service people want.

Starting a side hustle may not make you more money immediately, but with work and perseverance, you could boost your full-time income with a side gig. Don’t forget about ready-made side gigs, like driving for a rideshare company or delivering groceries for Instacart.

Think about how much time you spend on cutting costs versus how much time it would take to set up an income-producing business. Do the easy cost-cutting measures, but you can also make a big difference in your finances with extra income.

Ask for overtime

Perhaps you work in a job that offers overtime hours with overtime pay. Your full-time job might be thrilled to have you come on for extra shifts on weekends or whenever you’re free.

This is a cost-effective way to make more money, especially if your employer pays more for overtime than regular hours. It’s also easier on you because you don’t have to complete extra training to learn a new job.

A downside of overtime is that you might burn out on your regular work and just need a break. In that case, a side hustle may be preferable. Is working overtime worth it? You’ll have to decide for yourself.

Take free career training courses

Gaining some high-income skills through career training could be a good way to increase your income. As an alternative to a side gig, or part of the journey to building one, you can take free or inexpensive career training classes.

Aim for free courses when possible. These require an investment of your time but could lead to a higher-paying job. Earning more in a new career can reduce your need to cut expenses at all.

Just be sure to find training for jobs that pay well, that you might enjoy, and ideally don’t require an entirely new degree. Choosing a new career could change your life if you do it wisely.

Sell items

Another tip for earning more is to try selling the items you create. You could have your own Etsy store or a print-on-demand shop that’s entirely online. Selling a product can bring you more income, freeing up your money so that you can focus on paying off debt and other goals.

Of course, you might even sell things you have lying around the house, too. Finding the motivation to declutter could lead to a profitable yard sale or the sale of items through online marketplaces.

How can you cut expenses if you don't have much extra in your budget?

It may seem like there's nothing left to get rid of in your budget but look more carefully. Anything that isn't essential, such as subscriptions, can go.

In addition, try to spend less on essentials when possible. For example, cut back some on grocery costs if you can, and reduce electricity use. Remember that you still need to provide for your basic needs, but if anything isn't essential, you can spend less by getting rid of the extra costs.

What sort of expenses can you get rid of easily?

The easiest things to get rid of are costs that you're paying for that don't offer much value or that you don't use. For example, tv subscriptions, a daily coffee, or going out to dinner.

Giving up expenses like these is easy because you can still live well without them.

What is the quickest way to reduce costs?

The fastest way to reduce the expenses you're paying is to lower payments or entirely get rid of costs when possible. For example, try to lower expenses for insurance and groceries and get rid of anything non-essential.

More reducing costs articles

If you enjoyed this article about cutting expenses, check out these articles:

• Cutting The Budget: 23 Expenses To Cut Back
• 25 Ideas For How To Save Money Each Month
• 18 Ways To Save Money On A Tight Budget
• How To Manage Your Money: 19 Tips To Do It Right

Learning how to drastically cut expenses can help you reach your financial goals!

You might be working to cut expenses to the bone for a 6 month saving challenge or until you reach a milestone amount of money saved. Learning how to drastically cut expenses for a period of time can give you momentum to achieve your financial goals.

If you’re worried about how to cut expenses, remember that you have a lot of options! Plus, this period of spending less doesn’t have to last forever, but it may be a necessary step in your financial planning process to get where you want to be.