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How to cut spending where it makes sense

Cutting down frivolous spending starts with knowing your weaknesses.

If you want to narrow your budget and cut spending, that’s great! But it’s not always as easy as it sounds — here’s how to cut spending when it makes sense.

Figure out where your money goes

You’re going to need a budget if you want to identify where you can cut down on spending. But simply having a budget doesn’t mean you have to create spending limits for yourself just yet.

The first step in making a budget is figuring out where and how much you spend each month. This means separating all your spending into categories. At this point, we’re just sorting. Focus on identifying where your money is going, which can take at least one month. Be honest with yourself on how much you spend, because it’s going to be crucial in identifying what areas you can realistically cut back on.

You can sort expenses into two general categories and then into smaller subcategories, such as:

Graphic source

Need help sorting expenses?

If writing down all your expenses and spending habits sounds overwhelming, plenty of budgeting apps like YNAB and Mint can help. Also, online banks and fintechs with banking services, such as Chime and Albert, can categorize spending to help you identify spending habits.

Identity what category you want to cut down

With all your expenses categorized, you can look at areas you can afford to cut down. Here are some examples of cutting down spending on three categories:

1. Cut down on food costs

You could be spending more on groceries or eating out. Groceries are expensive right now, and a family of three spends around $900 per month on just groceries. Also, if you’re constantly looking up new recipes and buying 10+ new ingredients every week, that can add up quickly.

If groceries aren’t the issue and you’re conservative in that realm, look at how much you’re spending on fast food. The typical American spends around $1,200 on fast food annually, or around $100 per month, as reported Credit Donkey. If you’re spending hundreds of dollars each month on eating out, that can be a simple expense to start reducing.

2. Cut down on car insurance

It’s recommended that you compare insurance quotes at least once a year, ideally right before your term is up. Companies are more likely to offer lower prices or “new member” rates to encourage you to switch. For the best chances of finding a better deal, get a quote from at least three auto insurance companies.

3. Cut out unused streaming services

There’s a good chance you have a few streaming services you don’t use very often that cost you big each month. You don’t need to unsubscribe from them all, but it’s probably a good idea to review your subscriptions and cut the ones you don’t use that often or consider switching to a cheaper plan.

Even the basic plans for steaming services (without ads) get expensive when you add them together:

  • Disney+ Basic: $7.99/month
  • Hulu no ads: $17.99/month
  • Max: $9.99/month
  • Netflix Standard: $15.49/month
  • Spotify Individual plan: $10.99/month

If you have all of those services, you’re paying about $62 per month. And if you have additional services like Dropout, Funimation, Peacock, Prime Video, Paramount and so on, you can see how it can get expensive over time.

Set small goals for yourself and save the excess

Keep yourself motivated by setting small goals when cutting down on spending. For example, if you’re spending $100 per month on streaming services, aim to cut that down to $50 in a month or so. Or if you usually spend $200 per month on eating out, you can slowly cut that down to $175, then $150 and so on.

Cutting back on frivolous spending doesn’t happen overnight. You’ll have to identify your pain points first to craft a realistic budget.

And once you start to benefit from cutting bank on expenses, you can move that extra money into a high-yield savings account to reward your hard work with high yields.

About the Author

Bethany Hickey is a personal finance writer at Finder, specializing in banking, lending, insurance, and crypto. Bethany’s expertise in personal finance has garnered recognition from esteemed media outlets, such as Nasdaq, MSN, Yahoo Finance and AOL. Her articles offer practical financial strategies to Americans, empowering them to make decisions that meet their financial goals. Her past work includes articles on generational spending and saving habits, lending, budgeting and managing debt. Before joining Finder, she was a content manager where she wrote hundreds of articles and news pieces on auto financing and credit repair for CarsDirect, Auto Credit Express and The Car Connection, among others. Bethany holds a BA in English from the University of Michigan-Flint, and was poetry editor for the university’s Qua Literary and Fine Arts Magazine.

This article originally appeared on and was syndicated by

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