How to cut expenses as a homeowner

Owning a home is a rewarding experience, but it comes with its fair share of financial responsibilities. From mortgage payments to maintenance costs, the expenses can add up quickly. For any homeowner, managing — and increasing — your monthly cash flow can make all the difference between financial strain and security. 

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Not only does reducing expenses help you stay on track with mortgage payments, but it also helps you avoid debt, build savings, and achieve other long-term financial goals, such as starting a family or investing in a business. 

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This blog post will explore why it's vital to assess your finances and develop clear financial goals and how to cut expenses. 

The importance of evaluating personal finances

Understanding how your money ebbs and flows is key to revamping your finances. Taking stock of expenses, income, and needs is the easiest way to make informed decisions about cutting costs effectively. Before leaning into strategies to save more, you should: 

Revisit and monitor cash flow

As a homeowner, it’s important to know what your financial priorities are and where your money is going every month.  Take note of how much money is entering and exiting your accounts every month. This will help you identify unnecessary costs and align your monthly spending habits with your long-term financial goals. 

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You can categorize your expenses into two basic categories: fixed monthly obligations and variable expenses. Fixed monthly obligations are expenses you have to pay every month, such as your mortgage payments, utility bills, and loan repayments. Variable expenses are costs related to your lifestyle, such as groceries, entertainment, and other forms of discretionary spending. 

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In most cases, homeowners aren’t able to adjust their fixed monthly obligations. However, they can usually reduce their variable expenses by adopting lifestyle changes. Take a look at your bank statements and consider what variable expenses can be eliminated or at least reduced. 

Write down clear life goals and aspirations

When it comes to finances, it pays to look ahead. Understanding your current financial obligations and cash flow is important for maintaining your current financial benchmarks. However, if you plan to reach further goals, you’ll need to develop a clear understanding of your future income and spending abilities. 

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For many people buying a home is the biggest financial goal of their lives; for others, it’s only the first. When deciding to cut back on expenses, be sure to establish a clear reason why you’re making these lifestyle changes. This will help you stick to the financial adjustments you decide to make. 

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Keep in mind not all spending adjustments need to be long-term. If you’re cutting back on monthly expenses for a specific goal, such as a new car, you may only need to cut back on expenses for a year. If you need to reach a specific goal sooner, consider cutting back on expenses aggressively. Making a major change, such as not eating out for six months straight and taking public transportation every day, will help you reach your goal faster than continuing your regular habits. 

Create a monthly budget and long-term financial plan

Lastly, you’ll want to create a monthly budget you can stick to over an extended period. Having a budget allows you to ensure you’re seeing the results of your financial sacrifices and remain on track to reaching your financial goals. It also allows you to adjust your spending habits as needed if you fall behind at some point in the future. 

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While it would be ideal to keep a record of every dollar you spend each month, that’s not realistic for most people. One common budgeting strategy is the 50-30-20 rule, where you allocate 50% of your income to necessities, 30% of your income for desires, and 20% for savings. Depending on what your financial priorities are, you can allocate these percentages to different categories. 

10 ways to reduce ongoing expenses as a homeowner

Cut subscription costs

Monthly and annual subscriptions eat away at your disposable income. Go through your bank statements to look for services you no longer use or can live without. Consider canceling — or reducing — all unnecessary subscriptions until you’ve reached your financial goals. You may also want to explore opportunities for savings, like bundled packages that combine multiple streaming services into one. 

Purchase groceries strategically and plan meals

Groceries and food are mandatory expenses for everyone. However, the cost of groceries varies depending on your eating and spending habits. If you eat out a lot, chances are you spend more money on food than someone who regularly cooks at home. 

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By planning your meals and only shopping for the items you need, you can avoid impulse buying at the grocery store. Try creating a standard grocery list you can stick to month after month and buying non-perishable items in bulk. If you have a large family, explore a membership at a wholesale grocery store. The savings from shopping will likely offset the cost of a membership. 

Adjust transportation habits

Changing your transportation habits is another way to minimize expenses. For most people, owning a car is a significant financial responsibility that requires fixed and variable payments. Car owners typically have to pay monthly car payments and car insurance premiums in addition to maintenance costs that arise at unexpected times. 

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While it would be a major lifestyle adjustment, no longer owning a car could result in significant cost savings. If possible, opt for cheaper transport options, such as taking a bus, riding a train, or organizing carpooling with neighbors. 

Reduce utility usage

Utilities are necessities every homeowner needs to pay for. However, just like groceries, the price of utilities can vary based on household behavior. Embracing energy-efficient habits, such as turning off the lights when you leave a room, can help reduce monthly utility bills. Here are a few ideas homeowners can explore when reducing utility usage:

Unplug electrical devices when they’re not being used

In addition to switching off the lights, you should also get into the habit of unplugging devices while they’re not in use. Plugged-in devices absorb electricity even when turned off. You can block excess electricity by plugging your devices into power strips and turning off the power strip when devices aren’t being used. Consider purchasing smart power strips that manage electricity efficiently without you needing to turn them off yourself.

Seal energy leaks in your home

Poorly sealed windows and doors can lead to energy leaks and force your HVAC system to work twice as hard. Weatherproofing your home by sealing air leaks can help maintain ideal temperatures within the home and reduce the need to turn up the AC in the summer or the heat in the winter. 

Install a programmable thermostat 

Some smart thermostats allow you to change indoor temperatures remotely, while others self-adjust without you needing to make any changes. Both options allow you to maximize energy savings by auto-adjusting home temperatures according to the time of year and whether or not people are home.

Replace incandescent light bulbs with LEDs

LED lights last longer and use less electricity than incandescent light bulbs. Instead of looking at an LED light’s wattage, consider its lumens number to ensure you choose the right bulb. Wattage measures the electricity used, while the lumens number represents the light emitted. 

Lower the temperature of your water heater

Lastly, consider bringing down your water heater’s temperature. Most properties don’t need water heaters set higher than 130 degrees Fahrenheit. You could also use a water heater blanket and hot water pipe insulation to conserve energy throughout the home. 

Switch service providers

If it’s been some time since you last changed your cable, internet, or phone provider, you’re likely missing out on promotions. Shop around to compare pricing and terms — don’t be afraid to ask about promo periods. It’s also worth exploring any companies willing to bundle various services for less. 

Make energy-efficient improvements

For a long-term solution to excess utility usage, consider making energy-efficient home renovations. Although energy-efficient home improvements require an upfront investment, they often save money in the long run and can even boost your home's value. 

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Installing energy-efficient alternatives, such as HVAC systems, solar panels, or ENERGY-Star appliances, is a great way to cut back on utility expenses and increase your home’s comfort. 

Consolidate debt

A strategic way to reduce monthly expenses is to consolidate your debts into a single monthly payment. By consolidating your high-interest debt into a single loan with a lower interest rate, you could lower your monthly debt payments and possibly pay off your debt sooner.

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If debt consolidation isn't possible, there are various other debt-relief options worth exploring, such as debt settlement or negotiating with creditors. 

Reduce homeownership costs

When you purchase a home, you don’t just commit to monthly mortgage payments but also monthly insurance premiums and other property-related expenses. Revisit your homeownership costs to identify where you can cut back.

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If you pay Private Mortgage Insurance (PMI), make sure to contact your lender and remove it once you own 20% equity in your home. Homeowners insurance is another notable monthly expense worth reviewing. You should shop around for more competitive policies or ask your current insurance providers how to lower your monthly premiums. If your financial health has improved since you took out your mortgage loan, it may be worth seeking a better rate to lower your mortgage payment. 

Rent out extra space

Leverage extra space in your home to boost your monthly income. Consider renting a room or ADU on platforms like Airbnb or finding a long-term tenant to help offset mortgage costs. Renting out your home requires some upfront effort but can help you save big in the long run. 

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Alternatively, you could even rent out garage space to generate additional income. 

Explore housing alternatives

If you plan to sell your house within the next few years, it may be worth moving the timeline up. Downsizing or relocating to a more affordable area can help you cash in on your equity and free up more of your monthly cash flow. It's a solid strategy if you need to drastically cut your expenses and save a lot of money quickly. 

Final thoughts on cutting expenses as a homeowner

Homeownership is a major financial responsibility — but it shouldn’t be a continuous monetary burden. By assessing your finances, creating a budget, and cutting costs wherever possible, you can take control of your financial health.