Budgeting tips: Maximize savings by cutting down on these 3 categories

With the holiday spending season drawing near, many thrifty readers are already spotting sales and clipping coupons. Saving money for the future is probably the last thing on your mind. We’re here this week to put saving back on your radar. Here’s a few budgeting tips on where cutting your budget can save you the most.

If you already have a budget (and you’re sticking to it!) but are still struggling to save money, you may have budgeted more than you really need in a few categories. Think we’re going to tell you to cut out your coffee or avocado toast habits? Not quite.

Budgeting TipsThe Bureau of Labor statistics found that on average, Americans put 62% of their household spending towards 3 categories – housing, transportation, and food. Are those three things essentials? Definitely. But are you spending smart in those areas? Maybe not. Lots of budgeting tips focus on extra spending on shopping and entertainment, but we think your essentials budget deserves a look too. 

Budgeting Tip #1: Food

When you view a budget category as “essential”, it’s easy to justify spending more in that area, even if you’re unwilling to spend the same on shopping or entertainment. You do need to eat, but you probably don’t need to get takeout 5 times a week. People often suggest cutting out a daily coffee habit, but cutting out higher dollar value buys like lunches and dinners out or takeout has a much bigger impact on your wallet. One homemade meal substituted for takeout funds a whole week of Starbucks trips!

Budgeting Tip #2: Transportation

Your transportation budget might seem immoveable too – you have to get to work somehow! However, there are probably lots of sneaky ways you’re spending more than you need to. When public transit is delayed (or you just don’t feel like piling into crowded subway cards today), an Uber or Lyft might seem like the natural choice. Those trips can add up quickly, though – save by taking a shared car, if your ride-sharing app of choice allows it, bike, or walk.

You can also find out what kinds of commuter benefits your company offers to cut costs. Sometimes commuter benefits get lost in a sea of first week at work jitters, health insurance choices, and miscellaneous paperwork, but those benefits have the potential to add up to big savings for you – and some workplace commuter benefits will even cover Uber Pool and Lyft Line!

Budgeting Tip #3: Housing

Especially for those of us living in a big city, or those with families, housing can be the hardest category to cut back on. You may even be locked into a lease or mortgage that makes quick changes here hard. However, when you’re making your next choice about housing, take an honest look at your budget. For example, decide how much you value not having roommates versus how much you value saving.

According to federal guidelines, if you’re spending more than 30% of your gross income (read: income before taxes), you’re rent-burdened. If you’re spending more than that (or even if you’re not), try cutting back. Find a roommate or look for a better deal once your lease is up. Splitting your rent could save you 15% of your total income – a huge win for your savings account!


Cutting some of the biggest items in your budget is challenging, but you’ll save a lot more than if you just quit coffee. Any portion of your budget that’s over 60% of spending, even essentials, deserves a close look when you’re setting priorities.

Giving this strategy a try could help you finally hit your savings goals. Now that you’re saving like a pro, check out our post on what to do with those savings once you’re out of debt!

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