How to Cut Down Your Expenses

Household expenses list.

At tax time, we are often confronted with some hard truths about the state of our finances. Whether you are lodging your taxes for the first time or the 51st, seeing what you earned, what you have spent, and what you have left can be unsettling.

If your efforts are not netting you the amount of money you would like to see, pay attention to these practical tips to help reel in your spending, maximise your savings and still enjoy life.

If you are taking a trip to an unfamiliar location, you need to know where you are, where you want to be, and how to get there. No matter where your finances are or how you would like them to be, you need to assess your circumstances before making any plans.

Where to Start when Cutting Expenses

In your rush to try and change your ways and start building, it may be tempting to avoid assessing your financial situation. However, many banks have an assortment of expense calculators. Try using one and see where your money goes each month. There is a chance you can spot areas where you can reign in your spending and not feel a severe pinch to your lifestyle.

  • For Example – Dean is trying to increase his savings, but he enjoys dining out, purchasing nice clothing, and going on weekend excursions. A knee-jerk reaction would be to target these areas of Dean’s life for a change. While these might need amending, Dean learns other areas that need a change using an expense tracker from his bank. He is paying for several streaming services, automatically renewing a wine club’s subscriptions, and automatically delivering car care products. These expenses cost Dean $245 each month. Addressing these expenses will allow Dean to save money every month and enjoy the things he loves.

After tracking your expenses, itemise your expenditures and total them. Then compare your costs against your after-tax income. Typically, most people fall into one of these categories:

  1. Over Extended – You spend more than you earn, which can cause significant angst down the road. You have some changes to make.
  2. Living on the Edge – Your income is slightly higher than your expenses. However, one significant unforeseen event could cause you financial distress. Trimming some spending now can save you a great deal of angst later.
  3. Doing Well – You are earning more than you spend. However, saving for the future is a smart course of action at this phase.

Dividing Your Expenses

You can move forward with your budget renovation by dividing the expenses you listed into two categories: wants and needs. This will require a bit of mature self-reflection.


It is easy to justify treating yourself to activities or things you enjoy. Avoid that trap and keep a handle on your expenses. Cutting the things you want from your life is often a struggle. Only you can determine if something is worth the cost, if something is replaceable with a cheaper substitute, or if a want does not fit into your life.

In the example of Dean and his budget, he discovers several areas where he could cut some expenses. However, it is up to Dean to decide if costs should be cut. After evaluating where some of his money goes, Dean decides he will keep two streaming services and his car care products. However, Dean realises that he does not need the wine club or several streaming services his ex-girlfriend watched.

Other expenses are evaluated to explore more changes:

  • Instead of a few weekends away every month, Dean can take day trips.
  • A conscientious inventory of his closet reveals clothing Dean did not remember. So, he decides to limit new purchases to special occasions.
  • Because Dean does not cook, he decides to try to learn simple dishes and eat out just twice a week, not every day.


Trimming needs is a difficult proposition. You must pay rent, have a way to get to work, and make sure you have good childcare options and other necessities.

There are some needs you can negotiate, and you could save yourself a surprising amount of money by starting:

  • Swap childcare with friends and relatives
  • Compare prices at grocery stores
  • Make menus and lists ahead of time
  • Take turns hosting inexpensive meals with friends and watch shows and movies from your streaming service
  • Order and pick up your takeaway. You will save on the fees delivery services charge and support your local businesses

Young woman happy with savings.

Avoid Paying a Loyalty Tax

A loyalty tax comes at people from different directions. Many people have subscriptions to companies that automatically renew after a specific time. Often, people do not remember these exist. Perhaps they tried a service that offered a free trial period. The intent was to cancel before money became involved, but it slipped their mind.

Other services a customer wants and uses, but the price increases regularly. So, a service you once paid $9.99/month increased to $14.99/month or higher without you noticing.

Targeting these kinds of automatic charges can save a surprising amount of money:

  • Late Fee
    If paying on time is a problem, consider setting up recurring payments. While you still need to make your car payment, at least you will not need to pay a late fee on top of what you owe.
  • Saving
    Most people have the best intentions when it comes to saving. However, life finds a way to interrupt plans with surprise expenses. One way to save despite circumstances is to set up two bank accounts. Deposit your paycheck into one and transfer the amount for the bills you must pay. Make getting to the money left in the first account difficult, but not impossible. Your expenses will be covered, and you will have a bit of money in a savings account. Consider adding a few dollars when possible to your savings.
  • Round-Up Transactions
    When you spend $14.25 on lunch, a round-up transaction will take $15.00 from your account. $14.25 will pay for your lunch, and $0.75 will go into a savings account. Even though it may seem like a small amount, it will add up faster than you think.

It can be frustrating when you want to do your best to trim your budget and gather some savings. Sometimes advice from a trusted advisor is just what you need to help you move forward. For advice about your taxes and guidance regarding financial matters, feel free to contact the experts at Tax Our team can help direct you to the strategies that can significantly impact your financial situation.


*General Advice Warning – β€œAny financial advice provided by is general in nature and is not personal financial advice. It does not take into account your objectives, financial situation, or needs. Before acting on any information, you should consider the appropriateness of it regarding your own objectives, financial situation and needs.”