How to Cut Costs in a Family Budget

Cutting costs is one way to save money in the family budget.

A family budget breaks down household expenditures and makes it easier to identify areas of spending. At times, there may be insufficient income to cover the family’s expenses. In this case, the family needs to look for ways to cut costs in the budget. While some costs might be cut on a temporary basis, the most effective ones are those that have long-term advantages. By creating a budget-conscious lifestyle, a family develops good habits that can last a lifetime.

Instructions

1. Cut the amount of interest you pay on your home mortgage. Compare interest rates offered by different lenders, as well as the amount of money you might save by changing a 30-year mortgage to a 15-year mortgage. Before refinancing, ask your lender to disclose any additional costs you might incur in the process, such as a prepayment penalty, loan origination, title search and closing fees. Consult with your accountant as to the impact the lower interest rate might have on your taxes, as well.

2. Cut grocery costs by planning a monthly menu created around items that are on sale at your local grocer. For example, if hamburger is on sale, incorporate a variety of dishes into your monthly menu using this ingredient. Purchase sale items in bulk and freeze perishable items for future use. Further cut grocery costs by using both a store coupon and a manufacturer’s coupon on the same item. To avoid impulse purchases, create a detailed shopping list and use cash to pay for your items.

3. Cut your energy costs by performing regular maintenance on your furnace and air conditioner. Clean the filters on your air conditioner once a month during the summer. Cover the air conditioner during the winter to protect it and reduce drafts in the house. Utility companies frequently offer free energy audits, which will show you specific areas your house can be made more energy efficient. While improvements might cost money initially, they may save you money in the long term.

4. Cut unhealthy practices and save money. For example, if you typically order a soda with a meal at a restaurant, eliminate the soda and order a free glass of water instead. If you use the car to drive to a destination that is within walking distance, walk instead. If you use alcohol or tobacco, cutting these items can also save you money in future medical expenses.

5. Cut costs by sharing. If you typically drive your children to school, look for bus service or carpooling options to save money. If you are hosting a party, borrow or rent supplies, rather than purchasing new ones. Evaluate whether your house is bigger than you need. If it is, look for a smaller house. A smaller yard might also mean fewer maintenance expenses, too.

References

• University of Illinois Extension: Opening Doors to Housing Success
• Alabama Cooperative Extension System; 101+ Ways to Save Food Dollars; Barbara Struempler; 2008
• U.S. Department of Energy: Energy Savers - Maintaining Your Air Conditioner
• North Dakota State University: Healthy, Wealthy and Whys

Resources

• Read this Article in Spanish
• Read this Article in Portuguese