Make Your Costs Go Down: A Guide to Lower Cost Living

Housing expenses are often the most significant part of monthly budgets. Americans spend an average of $2,120 monthly on housing, or about 29% of after-tax income. That’s a 5% increase from 2022.³

But, there are many creative ways to reduce these costs and still live happily by choosing the right reduction for your situation. Here are a few to consider:

Downsize or move

Consider moving to a smaller home or an area with lower living costs. Downsizing to a smaller property can significantly reduce your monthly rent or mortgage payment.

Relocating to an area with a lower cost of living allows your income to go further for housing and other expenses like food, utilities, and transportation.

Share your space to save money

A 2024 study found that 62% of Americans would live in non-traditional ways – like moving back home with parents – if it helped save on housing costs. This idea is even more popular with younger Gen Z adults (71%) than millennials (52%).⁴

Besides moving back home with your parents, you could cut expenses by finding one or more roommates. Splitting rent and utility bills can significantly lower your own costs.

Also, if you have an extra room, renting it out means you may be able to afford a nicer place or neighborhood than you would by living alone. Although not ideal for everyone, sharing your living space can lead to significant savings.

Negotiate your rent to avoid spikes

Americans at every income level are struggling with higher rents.⁵ These rent increases can really add up and strain your housing budget.

However, most landlords want to keep their most reliable tenants rather than take on the time and expense of finding new ones. So, negotiate with your landlord a few months before your lease renews to avoid a big rent hike.

By talking with your landlord, you might agree on a smaller rent increase or even keep your monthly payment the same for another year, giving you more time to prepare for future rent increases.

Make home repairs yourself

Doing simple maintenance and repairs yourself avoids service fees from hiring professionals. Even basic jobs like unclogging a drain, patching drywall holes, or replacing air filters can cost over $100 for a handyman’s visit.⁶

With some basic tools and online tutorials, you can learn to do these minor fixes for just the cost of materials, allowing you to keep more money in your pocket.

Cut utility bills through energy efficiency

If prices rise, you can also expect your utility bills to increase. The best way to keep your bills low is to make sure your energy efficiency is high. Making your home more energy efficient reduces the amount of electricity and natural gas required for heating, cooling, and powering appliances.

Start by installing or upgrading to energy-efficient, ENERGY STAR^®-certified appliances. Then, seal windows and doors against drafts to improve insulation. An upfront investment in small upgrades like these can lead to lower monthly costs over time.

Managing food costs is key to financial health. The average U.S. grocery bill per person is around $418 monthly.⁷ Try these tips to reduce costs:

• Buy groceries in bulk and cook meals at home.
• Use coupons, buy generic brands, and shop sales to maximize savings.
• Start a vegetable garden for fresh, inexpensive produce.
• Buy meat and seafood in bulk when on sale, then freeze portions.
• Plan meals and get creative with leftovers to minimize food waste.

Other ways to reduce food costs long-term include:

• Choose locally grown, seasonal produce instead of pricier imported goods.
• Shop at farmer’s markets where small, usually family-owned farms sell their goods.
• Stretch the shelf-life of your food and reduce food costs by using preservation methods like canning and dehydrating.

Also, consider subscribing to a CSA (Community Supported Agriculture) box to buy shares in a local farm’s harvest in advance.⁸ The boxes are delivered with fresh, locally grown produce based on your family size and dietary requirements.

Some farms welcome visitors to buy goods on-site. Search online for farms in your area that offer this option.

Transportation costs add up quickly, especially with fluctuating gas prices. The average American spends about $12,995 a year on getting around.⁹ Here are five ways you can cut those expenses:

• Walk, bike, or take public transit instead of driving.
• Carpool to share commuting costs.
• Keep vehicles well-maintained with timely oil changes and proper tire inflation.
• Consider fuel-efficient or used vehicles when replacing your car.
• Take fewer trips by combing errands to reduce fuel costs and wear on your car.

Exploring different, less costly transportation options and maintaining vehicles properly might let you hang onto more of your hard-earned money.

Use these affordable tips to outfit your home stylishly and keep your wardrobe fresh without draining your wallet.

To outfit your home and closet affordably:

• Shop secondhand at thrift stores and online marketplaces
• Expand clothing lifespan by learning basic sewing skills to repair rips, replace buttons, and alter garments.
• Repurpose old clothing into rags or quilting scraps, and upcycle household items with a new coat of paint or other creative modifications.
• Swap gently used items with friends and family to get “new” goods for free while decluttering unwanted possessions.
• Support local designers, artisans, and small businesses for unique, affordable home goods and clothing not found at big retailers.
• Make your own household cleaners and detergents using simple, inexpensive ingredients like baking soda, vinegar, and lemon juice.

Getting resourceful allows you to cut costs substantially on wardrobe, decor, and household essentials without sacrificing style or quality.

Finding affordable entertainment and recreation is easier than you think. With a little imagination, fill up your free time without emptying your wallet. Cutting a few expenses allows you to pursue new hobbies and make memorable experiences on a budget.

Ways you can enjoy entertainment and recreation without overspending:

• Take advantage of local resources. Go to free local parks, community events like outdoor concerts, and public libraries for books, movies, and programs.
• Borrow instead of buying. Instead of buying new, borrow books, movies, video games, and more from your local library.
• Cut the cable cord. Cut expensive cable TV packages by accessing free broadcast channels or switching to cheaper streaming services.
• Entertain at home. For affordable socializing, host potluck dinners, game nights, and movie marathons at home.
• Get outside. Try inexpensive new hobbies like hiking, camping, bird watching, or photography that get you outdoors.
• Control your socializing expenses. Suggest low-cost or free hangouts with friends instead of pricey nights out.
• Get your family and friends on board. Practice loud budgeting by letting people know you’re not spending money on certain activities.

Exploring low-cost leisure activities gets you out of the house and into new experiences without going over budget.

When the unexpected happens, like a job loss, medical emergency, or major home repair, it can strain your finances to the breaking point if you’re not prepared. Taking some basic precautions ensures you’re ready to weather the storm.

• Start with an emergency fund with enough savings to cover 3-6 months’ worth of living expenses. Build it up by automatically transferring small, consistent amounts from each paycheck into a separate high-yield savings account.
• To protect your health, research health insurance options to find an affordable plan that covers your family’s needs. When possible, take advantage of free clinics or services with sliding-scale fees based on income for routine care.
• Eat nutritious foods and exercise regularly for a more preventative approach to health.

With a little planning, you can safeguard your finances so you’re equipped to handle whatever economic challenges may arise.

Making small, cost-cutting changes in all areas of your finances can lead to big savings. Keep looking for new money-saving ideas and stay thrifty to keep finances stable, even when costs climb.

Here are eight ways to create a budget to help you get started.