Tips to Help Families Save on Household Costs

Every month, there are going to be expenses you cannot avoid: food, utilities, rent, mortgage payments or more can all be preventing you from saving as much money as you would like to.

If your finances are particularly tight, you may even have a problem regularly paying off your monthly expenses. No matter the reason, if you are like most people, you would like to know how to reduce some of these monthly household expenses. In this article, you will learn some surefire ways to get your finances in order.

Saving Money on Rent

If you follow common financial advice, you know that housing-related costs should be no more than 30% of your budget. That is still a significant portion of your budget, which is why reducing costs here can greatly improve your financial stability. The methods you can use to save will vary based on whether you rent or own a home:

  • Make a deal with your landlord to get a lower rent per month. It is easier for them to keep you in the apartment than it is for them to find a new person who is interested in the space, and the longer you can commit to one space, the bigger a deal you could get.
  • Refer people looking for a home to your landlord. Some landlord provide discounts to their tenants in return for these referrals.

Saving Money on Your Mortgage Expenses

In most states, owning a home and paying the mortgage is cheaper than renting. If you are making mortgage payments, then, you are already saving more than you could be. However, there are ways you can reduce that mortgage payment, leaving you with even more money at the end of every month.

Many mortgages allow you to use the cost of their interest as tax deductions. Assuming this is the case with your mortgage, you can actually get an extra month of tax-deductible interest if you pre-pay January’s mortgage interest in December. This is because the tax is deducted based on when you pay the interest, as opposed to when the interest is actually due. Tax reductions on your mortgage interest cannot occur if you pay the interest more than a month in advance, but this trick can still help you increase your year’s tax deduction.

You can also save money on your mortgage insurance. The most important action is to make sure you are not paying for private mortgage insurance. Getting a mortgage while putting down less than 20 percent of the loan necessitates this sort of insurance, but it does nothing for you: although you are the one paying for it, it is designed to protect the investment of the lender, should you prove unable to pay. Therefore, you want to stop paying for it as soon as possible. Ideally, you have at least a 20 percent down payment available when you buy the home, but if you do not, check that you are not paying for this insurance once you have paid off 20 percent of the loan.

Saving Money on Auto Payments

The average American spends $8,003 on their vehicle every year. This is a significant portion of many budgets, which means saving money on it is a great place to look when lowering your monthly expenses. The first question to ask yourself is whether you actually need your car. It is more convenient than biking or riding the bus everywhere, but it is also more expensive. Here are a few questions to ask when deciding if you need a car:

  • Is your workplace near mass transit?
  • Do you have the extra time required to use mass transit?
  • In case of emergency, will you have access to a car?

If you do decide to keep your car there are several ways you can still save money. For one, you can refinance your auto loan. This is a good option if you have been able to make your payments every month, as this can raise your credit and thus make you likely to qualify for better interest rates.

You may also want to refinance your car if you struggle to pay off your loan. Refinancing can allow you to extend the term of your loan, decreasing monthly payments while increasing the number of months you have to pay it down. This means you pay more money towards interest, but it also allows you to actually afford the monthly fee.

Of course, it is worth checking what interest rate you could be eligible for even if your situation has not changed significantly since you got financing for your car. The person who sold you your car financing may have given you a bad deal, so make sure you understand whether the interest rate you got is the one your credit score merited.

Saving Money on Discretionary Spending

Sometimes, the hardest part of balancing a budget is practicing self-restraint. Even if you have enough to pay off all your necessities and debt, you may be tempted to make purchases you do not actually need. There are tricks you can use to make sure your discretionary spending does not outpace your ability to pay for what you spend.

One trick is to wait 24 hours before making a non-essential purchase. This period of waiting can help you set your priorities: you may want the discretionary purchase enough to make it worth what you would pay. However, you may also decide that once the impulse of wanting to buy wears away, the purchase does not look as good. You may decide you can wait and save up before making the purchase. An interesting twist on this idea is to freeze your credit card. This may seem extreme, but by placing your credit card in a frozen bag of water, you prolong the amount of time you are forced to wait before using it. This allows you to sit and consider whether the purchase is worth the wait.

If you do not want to wait, there is another method you can use to ensure your discretionary spending does not get out of control. When using this method, every time you make a non-essential purchase, you put an equal amount of money into your savings. If you do not have enough money to put into your savings, you do not have enough money to make your discretionary purchase

Using ideas like these can help you save money on many of your household expenses.

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