Ah, household bills. Even though they’re necessary to survive, it can still hurt to see a big chunk of your money leaving your account every month, and you might feel like it doesn’t give you much left over for anything else.
But don’t worry, there are several easy steps you can take to cut down on those expenses. Here are some ways that you and your family can get the most out of your finances.
How do you drastically cut household expenses?
If you’re trying to cut your household expenses, your first step is to make a household budget to determine exactly where your money’s really going each month. Making a spreadsheet with software such as Microsoft Excel or Google Sheets is an easy and accessible way to visualise your income and outgoings. With all their functions, they might seem daunting to those not used to using them, but you can find plenty of tutorials online. You only need the basics to make a simple monthly budget.
Now that your spending is laid bare, it can be a bit of a wake up call. Did you know you were spending that much money on takeaways? That Audible subscription has been going out for how long now? Sometimes it’s not obvious how much things can add up to until you see them from a bird’s-eye view. But with your outgoings put into perspective, it makes it easier to see what you can afford to cut.
What are the easiest expenses to cut?
Once your expenses are written down, you can sort them into your “needs” (rent, travel, utility bills, basic food) and “wants” (streaming service subscriptions, a cappuccino on your lunch break, a bottle of your favourite rum). The “wants” may still be important to your well-being, but it’s here that you can find the easiest expenses to cut.
If impulse-buying during the weekly shop is an issue for you, using your budget to make a shopping list and following it religiously will help you cut down on those expenses. They’re small, but they can really add up. And that doesn’t mean never buying your favourite chocolate ever again — it just means that you’re aware of exactly where your money’s going.
Exercise is important, but if you only use your gym membership twice a month then it’s worth looking into cheaper options to stay fit. The Couch to 5K programme can get you up and running in no time, while yoga and bodyweight exercises can be done at home with nothing but your body.
However, it’s unfair to assume that financial problems only come from excess spending. You might already be doing all you can and more to only spend on the necessities, but what then?
How can I reduce the cost of my bills?
The next step is trying to reduce the cost of the necessities themselves — your household bills. From electricity bills to transport, there are several easy actions you can take to shave your costs down:
- Turn the heating down a degree or two and layer up.
- Replace your light bulbs with LEDs — they’re more efficient, and will save you money in the long term.
- Switch out short car journeys for walking, cycling, or public transport to save money on fuel.
- Get a water meter. If your water usage is quite low, a water meter will mean you only pay for what you use.
These kinds of changes are good for both your bank account and the environment. But if you’re looking to do something a bit more drastic, there are still options. You may be able to get grants to help with installing better insulation, a better boiler, or solar panels. Alternatively, you could switch energy suppliers — check out Ofgem’s guide to switching energy suppliers to hear from the experts.
Paying for bills by Direct Debit may work out cheaper and means you won’t have to worry about remembering to make a payment. And if you’re behind on payments, you can talk to the people you owe money to. Getting in contact may seem scary, but you may be able to negotiate smaller payments until your situation improves.
What’s the 50 30 20 budget rule?
In short, it means 50% of your income going towards your needs, 30% towards your wants, and then 20% towards savings. Putting a number on it makes it a definite goal to work towards, and makes it easier to tell if it’s leaning just a little bit too much towards the “wants” section.
That 30% is important, though — getting your nails done or going to your favourite restaurant every once in a while isn’t necessary to survive, but humans are here to do more than just survive on the bare minimum! If you can, allocate that 30% towards something that makes you happy. Putting a hard percentage on it means that you can enjoy something without worrying about it cutting into your necessary spending or saving money.
That leftover 20% can go towards your savings. When it comes to larger purchases like a holiday or a new car, or more long-term goals like retirement or a mortgage, the sooner you start saving, the better. Alternatively, some of this could go towards paying off debts. Having an emergency fund is also a sound idea. We never know what’s right around the corner, and you might find yourself needing to fork out for some new tyres or essential repairs for your house. Saving now means more security in the future.
It’s good to be prepared, but it’s all too easy to be caught off guard by an unexpected expense or find that your household bills are piling up too high to deal with. If you’re in need of help, you may want to consider taking out a small personal loan. Salad Money provides affordable loans to employed people across the UK. For more information, read up about us or get in touch to discuss your options.
