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How to cut monthly expenses to make a major impact on your budget - not your life

, by Rob Kaufman

For those of us trying to save money, cutting expenses can often feel like an overwhelming task. We sometimes think we need to get rid of something "big" in order to get spending down to a manageable number. The problem with that approach is that typically the "bigger" the item we lose, the larger the impact on our life. The trick is to make enough "smaller" cuts so that the changes are imperceptible - well, at least almost imperceptible.

Know your numbers

The first step to any budget-cutting plan is to know your actual budget. In very simple terms, that means adding up all of your monthly after-tax income and subtracting your current monthly expenses. (Want a calculator to do this for you?) If the final number is positive, you're definitely on the right track and don't need much guidance. If, the final number is negative, read on to get some tips for cutting expenses without changing your life.

Essential Expenses

There are some things in life we consider essential, like: hot water, electricity and car insurance (if you drive a car, of course). When trying to lower monthly expenses, these should be the first items to look at. Since they are essential, you can't cut them out completely, but there may be some ways to trim their cost.

Heat and Electric

Programmable thermostats are helpful because you can cut electricity costs by setting them to "automatically" turn the A/C and heat on and off at specific times. However, you can still lower these costs by setting the thermostat manually - and wisely.

Did you know that says you could save 10% a year on heating and cooling by simply turning your thermostat back 7°-10°F for 8 hours a day from its normal setting? So, by turning the thermostat up 1°in the summer (or down 1° in the winter), you can save about 1% of your total A/C and heating costs.

Also, many utility companies charge lower rates during off-peak hours (early in the morning or late at night). Therefore, you can lower your electric bill by filling your washer, dryer and dishwasher and running them during the hours your utility company considers off-peak.

And, of course, what would saving money on electric bills be without mentioning the switch to energy efficient light bulbs? Over time, using these bulbs can save you money, as can unplugging chargers and other plugs from the wall when the appliance is not in use or gadget is not being charged.


It's important to always shop around when searching for car and home insurance. Though you might like the company you're with, try to make sure you're getting the rates, breaks and discounts you deserve.

  • Are you paying less for auto insurance because you have multiple policies or theft protection? You should be.

  • Did your homeowners insurance go down when you installed your security system? It should have.

Once you're certain you're getting the best bang for the buck, think about raising your deductible in order to lower your premium. Be sure to inform your auto insurer if a car on your policy is driven less than 7,500 miles per year since low mileage discounts are standard for many insurance companies. Plus, keeping homeowners, auto and other insurance policies with the same carrier can often lead to hefty discounts.


Although coupons are a great way to save at the grocery store, when was the last time you searched, clipped and used a coupon? If it's recently, keep up the good work. If you can't remember, try to use some of the tips below.

  • Use cash only at the grocery store. It helps you stick to your budget.

  • Buy generic brands. They cost less and are often just as good as brand name items

  • Bring a calculator so you can see how costs are adding up "as you go"

  • Slice the meat purchases a bit since it's typically the most expensive item and doesn't need to be a part of every meal

  • Shop the season. Buy fruits, vegetables and other produce while they're in season because that's when their prices are lowest

Nonessential expenses

To be clear: Nonessential does not mean unimportant, it means "not absolutely necessary".  There are some items we feel are necessary (i.e. cell phones, credit cards, satellite radio), but if push came to shove, it would soon become obvious that they aren't as vital as electricity and food.

Cell Phones

One of the best ways to keep cell phone expenses down is to always have an eye on your calling plan. Make sure you have the right plan for you (and your family), one that serves your needs but keeps costs down. Check with your carrier on a consistent basis to see if there are any new voice, data or text plans available.

Cable/Satellite TV

Similar to keeping an eye on your cell phone plan, review your TV's plan. Do you need all the premium channels for which you're paying extra? If you switched to having only local and streaming channels, or if you went with only a streaming service, would that be enough programming to fill your TV time? Have you called the cable or satellite company to ask for special plans or a discount? As with anything else, it never hurts to ask.

Credit Cards

First and foremost, check to be sure that every charge on the card is legitimately yours. Identity theft and credit card fraud can be costly to fix if you don't catch it early.

If you're currently paying off a credit card balance, do a little research to find a lower-interest card to which you can transfer your balance. Check the fine print for fees and payoff timeframes to be sure the transfer is right for you and your budget. While doing research, check for cards with special rewards. For instance, some cards give you money back on grocery purchases, gasoline, etc. Lower interest plus money back can save you a lot of money every year. We make it easy to filter for these types of credit card features in the myFICO savings center.

If you're ready to take control over your budget, take a look at the FICO Budget Calculators . If you use them correctly, they might even help put a smile on your face when the bills come in.

Rob Kaufman

Rob is a writer... of blogs, books and business. His financial investment experience combined with a long background in marketing credit protection services provides a source of information that helps fill the gaps on one's journey toward financial well-being. His goal is simple: The more people he can help, the better.