This article is an excerpt from the Shortform book guide to "Your Money or Your Life" by Vicki Robin and Joe Dominguez. Shortform has the world's best summaries and analyses of books you should be reading.
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Do you want to learn how to spend less money? How different could your life be if you saved more or lived on less?
In Your Money or Your Life, Vicki Robin and Joe Dominguez identify 11 categories of expenses and offer suggestions on how to spend less money in each. Whether it’s related to housing or parenthood or gift-giving, you’re likely to find expense-cutting ideas that make a difference for you.
Read more to learn how to spend less money.
11 Places Where You Can Spend Less Money
We’ll look at some specific suggestions on how to spend less money within 11 categories of expenses.
1. Banking and Loans
Many big-name banks have high fees associated with opening and maintaining accounts with them. Instead, open accounts with a credit union. Credit unions are not-for-profit, which translates to having lower fees and better interest rates than for-profit banks.
In general, most banks, credit union or not, will charge you a fee if you attempt to spend more money than you have, known as overdrawing. Avoid this by using your bank’s online tools and other money management software to track what you spend, set up automatic bill pay, and alert you when an account balance is low. This is how to spend less money simply by keeping an eye on things.
2. Housing
Popular wisdom of the past century says to aim to spend about 25 percent of your monthly income on housing. But these days, people often spend 40 percent or more of their income on housing.
Consider how to spend less money on housing with these strategies:
- Join cooperative housing. Co-op living allows you to have your own space while sharing common responsibilities like cooking and cleaning. They’re a great way to save money and grow your social circle.
- Move to an area of town where rent is less expensive, if possible.
- Move to a town that is less expensive if your job allows you to work from home.
- Choose smaller apartments or houses, which are cheaper to heat and cool.
- If you are looking to buy a home, consider buying a duplex or something that you can rent part of. This will allow you to lower your mortgage payment each month, and could even help you pay off your mortgage sooner.
3. Transportation
Owning a car is second only to buying a house in expensiveness. Apart from the initial cost, the maintenance, upkeep, and insurance add up. Avoiding car ownership entirely is often the cheapest way to go, with alternatives like car-sharing programs, renting cars, and public transportation abounding in cities.
If you still want or need to own a car, try to prioritize the following:
- Fuel efficiency. It’ll save you gas money in the long run.
- Reliability. It’ll save you maintenance and repair costs.
Even if you have a car with these qualities, you should still try to drive as little as possible to avoid costs associated with fuel and wear. Here are two suggestions:
- Minimize your commute to work by living closer, or work from home some days.
- Opt for walking, biking, and taking the bus.
4. Health Care
Saving money on health care tends to fall into three categories:
- Self-care
- Health Insurance
- Health Care
Maintaining your health in a preventive way, or self-care, is one of the most important ways to save money. Basic self-care includes eating well, exercising, adequate sleep, and plenty of rest. It’s much cheaper to pay for services to keep yourself healthy rather than to pay medical bills.
But even if you’ve developed healthy self-care habits, you’ll still want health insurance coverage in case you experience more serious health issues. Here are some suggestions to consider when selecting health insurance coverage:
- Choose state-run health insurance, which is often more affordable.
- If you’re healthy, choose a plan with lower premiums and higher deductibles. These plans have lower month-to-month costs.
- Some employers will let you place pre-tax earnings towards health coverage. You can use the money set aside there to pay for certain medical expenses.
- Many healthcare plans offer low-cost preventive services, such as annual exams and screenings, as well as some counseling services. Take advantage of all your health insurance benefits.
Certain medical procedures in other countries can run between 20-90 percent cheaper than in the US. However, if you suffer complications once you’re home, treatment could be expensive. Do thorough research before choosing this route.
5. Sharing Your Skills
As we’ve discussed, developing a sense of community helps you satisfy your needs through human connection instead of spending money. Giving your time and talent in exchange for someone else’s time and talent is a way to build your community and get your needs met for cheap.
All you need to do is come up with something that you need and something that you can give. For example, maybe you can cut someone’s hair in exchange for some tax advice.
6. Food
Everyone needs to eat. But there are ways to source your food that can significantly reduce your food bills.
Here’s how to spend less money on food:
- Cook for yourself. Restaurant meals tend to run more expensive than simply buying the raw ingredients and cooking them yourself. If you have friends over for dinner parties, this strategy could reduce not only your food bills, but your entertainment bills.
- At the store, try the following:
- Use coupons.
- Buy bulk items.
- Buy sales items.
- Avoid prepared or highly processed foods.
- Stick to seasonal produce.
- Consume less alcohol, coffee, and meat, or buy them on sale (they’re the top 3 most expensive food items).
- Access food outside of the supermarket. Try these four ways:
- Grow your own food, giving yourself access to fresh produce for just the cost of the implements and your time.
- Band together with friends or family to form a buying club. Buying clubs allow you to buy foods in bulk, such as meat from a local rancher, for a discounted price.
- Ask neighbors with excess produce or tree fruit if they’d let you harvest some.
- Forage for food that grows wild in your community.
7. Entertainment, News, and Cellphones
How we entertain ourselves, learn about the world, and communicate all have significant costs.
Here’s how to spend less money on entertainment costs:
- Avoid paying for cable television by opting for a free receiver instead. You can still access basic channels this way.
- Subscribe to streaming services. Find the service that most closely aligns with your interests to avoid paying for multiple services.
One way we learn about the world is through watching and reading news. But access to news has gotten more expensive, with many outlets now charging hefty monthly subscriptions. It’s important to support news outlets, but as with streaming subscriptions, make sure that you’re only paying for the services you need and use. Libraries also offer ample access to entertainment and news these days, and membership is free.
For phone coverage, try the following:
- Go without a landline if you haven’t already.
- Explore no-contract options, which allow you to bring your own device. This way, you can use a used phone of your choosing that costs less than a new one.
- Use a family plan. They tend to offer better rates than individual contracts.
- Try a pay-as-you-go plan. It can be cheaper than a consistent monthly payment, depending on your usage.
- Use WiFi as much as possible to reduce your data costs.
8. Vacations
The more you become aware of your relationship with money and learn to enjoy what you have, you may not want to vacation as much. Even so, you likely won’t give up traveling entirely. Here’s how to spend less money on vacations:
- Sign up for alerts on sites that feature discounted flights.
- Be flexible about where you travel and when you go. Going during less popular travel times or to less popular destinations will save you money.
- Opt for cheaper accommodations, such as hostels, or couch surfing.
- While traveling, steer clear of touristy areas, as they tend to charge a premium for goods and food.
- Walk and use public transportation to avoid spending money on expensive cab fare or other private transport options.
9. Insurance
It’s common to overpay on all kinds of insurance. Look through each of your insurance policies to ensure you’re getting only the coverage you need and want.
For example, one couple realized that they were paying $6 a month to insure jewelry that they wouldn’t want to replace—the value was in the history of the item, so a contemporarily-made replacement would not be the same. They decided to drop the insurance entirely.
10. Parenthood
A study estimated that parents in the US will spend over $230,000 raising a single child to age 18, not including the cost of higher education. Finding ways to keep child-rearing expenses low is key.
Here’s how to spend less money in this area:
- Embody frugal living. Children tend to emulate the role models in their life, especially parents. Living frugally will encourage your child to do the same.
- Substitute creative activities for spending money on goods. That said, if a kid is really excited about getting a physical item in lieu of doing something creative, try telling them you’ll talk about it again in a few days. As with adults, this may be enough time for kids to realize that they don’t really want the thing after all.
- Get things for less. Some of the biggest kid-related expenses are basic needs, like clothing. Look into parent groups in your area that swap and sell used goods of all stripes, from cribs to clothing.
- Find parents that you can share babysitting duties with. Maybe one week, you watch their kids, and the next week, you swap.
- Look for cheaper ways to pay for higher education. Try these strategies:
- Research scholarships and other ways to save money.
- Use university calculators to estimate how much aid a school might give you. These kinds of tools break down what portion of aid will be from loans versus work-study and scholarships.
- Have your child enroll in community college classes through the Running Start program, which allows high school students to take up to two years of community college classes.
- Have your child take AP tests in high school to earn some college credit.
- Have your child earn a 2-year degree from a community college before transferring to a 4-year school.
11. Gift-Giving
Giving gifts is a popular way to show affection. But not only can gifts be costly, there’s also no guarantee that your gift will be enjoyed or used.
Here are three strategies to avoid over-spending on gifts:
- Ask your children to name 1-3 things they want for Christmas or birthdays and limit presents to just these gifts.
- Give experiences instead of physical things. For example, instead of giving your Mom a piece of clothing she doesn’t really need, consider giving her the gift of cooking a meal together. You’ll enjoy each other’s company, and avoid spending money and resources on something that will just gather dust in the closet.
- Practice regifting. If you receive a gift you don’t want, consider regifting it to someone else that you think would make use of it. Just be careful to avoid giving the gift back to the person who gave it to you.
Once you feel confident knowing how to spend less money in various areas of life, you can make real change happen.
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- The 9 steps to reach financial independence
- How to change your entire relationship with money and live a more meaningful life
- How to align your spending habits with your values, purpose, and dreams
