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Cost-Cutting Tips

Small changes to your budget could mean larger bills in your wallet.

En español | Wondering where all your money goes, and how it manages to go there so fast? The cost adds up, whether it’s on eating out, food, clothing, entertainment or seemingly innocuous things like gum or bottled water.

The truth is that many of us spend too much. The daily drain on our wallets can be a real eye opener. If you can afford such luxuries as gourmet teas and coffees or designer clothing and still save for your future, great. But if you’re struggling to meet the financial goals you’ve set on your retirement road map, it’s time to look for ways to cut the little expenses — daily, monthly and long term.

A recent financial survey conducted by Ariel Investments found that 43 percent of blacks and 29 percent of whites report making "significant" changes to their lifestyles. Eight in 10 African Americans and seven in 10 whites say they have cut back on spending in the past two years.  A 2009 study conducted by the Pew Hispanic Center found that more than seven in 10 Latinos have cut back on dining out.

It’s easy to spend money without realizing how much it adds over a week, a month or a year. If you’re looking to keep your nest egg safe or just grow one, the following cost-cutting strategies can help you rein in the spending.


  • Refinance your home.  If you’re paying high interest on a mortgage and you plan to stay in your home for a few years, consider refinancing. Do your homework to avoid closing costs that might make the move less attractive financially.
  • Reduce your credit card debt. Contact your lender and try to negotiate lower finance charges and then pay down the debt as fast as you can, starting with the high-interest debt. (See AARP’s Tip Sheet, “Managing Debt.)  

Next: More Cost-cutting Strategies >>

Meals and Entertainment

Many of us love to eat out, whether it’s the daily breakfast at a pricey coffee shop or fast-food meals. Think about where you’re eating and what it’s costing you. Regularly bring your lunch to work and home-cook your meals for dinner to reduce food expenses. Movie fans can save money by renting DVDs and making popcorn at home. 

Household and Transportation Expenses

Cable television, house and cell phones, and Internet service can add up to a tidy sum every month. Compare phone plans if you’re in an area with more than one provider to ensure that you have the most economical plan available. 

Do an energy review of your home. Energy costs are climbing and will probably continue to do so. Fix drafty windows and doors with weather stripping, insulate them with blinds or curtains and, during the colder seasons, turn down the thermostat by a couple of degrees. Consider solar heating and cooling if such a system is feasible where you live. If you have central air, try to use it less. Install ceiling fans in some rooms so you don’t have to cool the entire house. During the summer, avoid using the clothes dryer, dishwasher and other appliances during peak hours so as to lower your energy bill. 

Your biggest transportation expenses probably come from one or more vehicles. Here are some ways to cut back on those costs:

  • Carpool to work with neighbors or colleagues.
  • Talk to your insurance company about ways you can lower your rate.


Thoughtful planning before you shop is a good way to reduce expensive impulse buying. Whether you’re going to the grocery store, shopping for holiday gifts or looking for a new pair of shoes or a party outfit, make a list and decide what you can afford to spend ahead of time — and don’t buy something unless you really need it.

Health Care

As health care costs spiral higher, they become a larger part of almost everyone’s budget. To minimize your costs, review what you spent on health care and insurance last year so you can make sure you choose the coverage that’s best for you and your family.  Whether you have a choice of plans offered by your employer or buy your own insurance on the open market, calculate which deductible works best for you. If you and your family are relatively healthy, a higher deductible may be the most economical choice. 

Also, see if you can save health care costs by following these tips:

  • Learn if your health insurance offers a mail-order system for prescriptions. It’s usually cheaper than buying directly from the drugstore.
  • Note the anniversary date of your insurance before scheduling routine medical appointments or tests. For example, your insurance may require you to wait a full calendar year between mammograms. If you schedule a mammogram even a day or two before the end of that year, the insurance may not pay for it.
  • If you know you’ll need several appointments or tests that are definitely not urgent, consider waiting until you choose your insurance for the next year. Then take a lower deductible so that you’ll get more of the costs covered.

Next: Luxuries and Unnecessary Expenses>>

Luxuries and Unnecessary Expenses

It’s easy to commit to expenses for goods or services that sound appealing or necessary — and then end up not getting your money’s worth. If you pay for weekly housekeeping, try to cut back to twice a month. Cancel subscriptions to magazines or newspapers that are piling up without being read, or membership at the fitness club you never visit. These and other cost-cutting tips are a few examples of how you can begin the journey toward meeting your financial goals for your retirement. 

See Also: 99 Great Ways to Save >>

12 Cost-Cutting Tips 

Estimated Monthly Savings

Cut out one restaurant per week $40-$100
Make coffee at home 
Use coupons     
Rent a DVD 
Buy generic drugs 
Downsize from premium to basic cable $10-$40
Use public transportation or carpool $40-$60
Keep tires inflated and engine tuned $5-$10
Explore basic phone plans $20-$30
Cut energy costs 
Get free checking  
Use only your bank’s ATM $5-$10

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