How to Lower Your Monthly Bills to Save Money

dad and daughter sitting at the counter doing bills

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Being prepared for unexpected expenses is a key aspect of financial stability. However, roughly one-third of U.S. adults have said that even an unexpected $400 expense would be tough to pay with cash on top of their monthly bills. The effects of that have been glaring, taking a toll on monthly expenses.

In fact, 53% of lower-income adults said they aren’t able to pay their monthly bills due to the global health crisis, according to an April 2020 study by the Pew Research Center. Some 37% of middle-income and upper-income adults said the same.

Fortunately, gathering the bills you pay automatically—and devoting a few hours to reducing or eliminating them—will go a long way toward helping you be in control of your finances. Here are a few efficient ways to reap savings from the products and services you rely on the most.

Eliminate Unwanted Bills and Expenses

Even if you earn a decent salary, there’s no advantage to it if most of it goes toward bills at the end of the month. But it’s possible to cut out unnecessary bills. To figure out if you’re spending on services and items you don’t need, print all of your monthly statements and see if you can consolidate them. Then, eliminate indulgences such as monthly box clubs, gym memberships, music streaming services, magazine subscriptions, and more.

Since cash payments tend to be geared toward choice expenses, like entertainment and luxury items, eliminating those first may be an easy way to stop spending too much, too easily.

You may want to consider using personal finance software as well to help you better understand your spending habits and how you can change them.

One of the easiest ways to ensure you have money for fluctuating bills is to consider painless ways to trim your spending.

“Make a money list of all your expenses: money in, money out,” personal finance educator and author Tiffany Aliche told The Balance in a phone interview. “How much are you making, and how much are you spending on each item? Once you have an idea of what’s happening financially, add a line for emergency savings, or things you can say ‘yes’ to that are important to you.”

Drop Cable for Streaming Services

One of the easiest solutions when trimming household costs is to drop your cable package and pay out-of-pocket for streaming services like Hulu or Netflix. This switch could save you hundreds per month—a bonus if you don’t actually spend much time watching TV.

Not convinced? In 2020, some cable providers hiked monthly fees by as much as $30 per month, while the basic level of many streaming services cost less than $15 a month.

Sharing accounts between family members, friends, or roommates could also help you save, as some of the more advanced options of streaming, which may include live TV, can be more costly. In the case of Hulu, for example, the streaming service plus live TV costs $64.99 per month as of June 2021, and that increases to $70.99 per month for the no-ads option. 

Shop Around for New Car Insurance 

If you haven’t looked into new car insurance in a few years, it actually pays to shop around. Though you may feel this expense is worth the splurge since you’re paying for peace of mind (and are protecting yourself financially in case of accidents, which can ultimately be more costly), keeping an eye out for more affordable plans can save you hundreds of dollars annually on your premiums. In early 2020, 77% of auto insurance customers were either actively shopping for a new carrier or had experienced an event that led them to start searching.

Do your homework on insurance pricing by researching and reading ratings of companies online. Don’t be afraid to ask family and friends for recommendations, too. A good rule of thumb is to get at least three price quotes to compare.

It pays to pick the right policy before purchasing a new car, as insurance premiums are based on the vehicle’s price, potential repair costs, and the likelihood of theft. If your car is worth less than 10 times the insurance premium, the coverage might not be worth the cost. You can find out your car’s value at Kelley Blue Book, then discuss potential savings when it comes time to renew coverage.

Though most car insurance savings you negotiate will likely be modest—most plans keep their rates flat year to year—it pays to contact your current provider to find out if they can drop your rate to match a competitor’s pricing before you switch. Many companies also offer discounts to policyholders who have a good track record with a lack of accidents or moving violations. 

Skip Impulse Buys at the Grocery Store

While you’ll naturally save on food costs by swapping restaurant dining for in-home cooking, the price of groceries actually increased over the last year. The average annual food-at-home prices in the U.S. were 3.5% higher in 2020 than in 2019, thanks to supply chain disruptions and a shift in consumption patterns, according to the U.S. Department of Agriculture.

In 2019, Americans spent an average of 9.5% of their disposable, personal income on food in general, with 4.9% going toward food at home and 4.6% allocated for food purchased outside the home.

While purchasing what you need at the grocery store is important, we all know what it’s like to fall for those impulse buys on the way out. Cutting those small expenses could make a huge difference in your monthly spending toward food.

Some easy ways to save on essentials include buying store-brand or generic products, using coupons or apps, and taking advantage of your store’s bonus card.

Look for Ways to Save on Utilities

The typical U.S. family spends at least $2,000 per year on home utility bills. Since utilities are expenses incurred automatically as part of our daily lives, they’re often not the first thing we consider when thinking about trimming expenses, Bevin Morgan, a certified financial trainer at The Financial Gym, told The Balance via email. However, being more aware of your electricity and water usage can help you reduce that monthly balance. 

There are a few easy tricks you can adopt to lower the bill, including turning off lights when you leave rooms, using energy-efficient power strips, and using appliances that tend to require a lot of energy—such as dishwashers—during off-peak hours. Homeowners might also consider upgrading to a smart thermostat with eco-friendly temperature settings and that automatically adjusts to the room’s temperature. According to Morgan, automated savings techniques are an efficient way to ensure you’re cutting down on spending.

By lowering your thermostat just seven to 10 degrees from its normal setting for eight hours a day, you may be able to save as much as 10% per year on your energy bill, according to the U.S. Department of Energy. The percentage of savings increases for those living in milder climates, too.

Chip Away at Credit Card Debt

Once you have a monthly budget in place based on your new, lowered expenses, make a plan to reduce credit card debt—and stick to it.

Morgan recommends the avalanche method. First, list all your credit cards, their balances, and their interest rates. Then continue to make minimum payments on all of your cards, but choose the one with the highest interest rate, and apply any additional money toward that one first until it’s paid off. Once one card is paid off, move on to the next one with the next highest interest rate.

“By consistently and aggressively paying down the card with the highest interest rate, you’ll pay off your cards faster and see magic happen,” she said.

You could also try the debt snowball strategy, where you prioritize paying off the card with the lowest balance first, and work your way up from there.

Experiencing Financial Hardship? Ask for Help

Even if you’re a prudent saver in normal circumstances, external factors like a global health crisis can make financial management seem more overwhelming in the face of economic uncertainty. It’s best to contact the companies you owe money to and discuss your financial situation. Whether it’s with rent or mortgage payments, utilities, student loans, or medical bills, most companies will allow delayed or flexible payment plans. Through the Coronavirus Aid, Relief, and Economic Security (CARES) Act, you may qualify for rental assistance and eviction moratoriums, help with paying for prescription drug costs, and more. While the CARES Act only banned evictions for a limited amount of time, these moratoriums were later extended through July 31, 2021.