How to Lower Your Cost of Living

How to Lower Your Cost of Living

June 05, 2024

If you find yourself using most of your income on necessities with little money left over at the end of the month, you aren’t alone. The general rule of thumb is to spend no more than 50 percent of your earnings on essential expenses, but Americans typically use more than 76 percent on housing, transportation, and food—leaving not much for savings or anything else. If you suspect that your cost of living is too high, follow these tips to help correct your finances.

Calculate Your Costs

The first step in lowering your cost of living is simply to determine what percentage of your income you’re spending on necessary expenses. Start by totaling all your monthly fixed expenses, including your mortgage or rent, utilities, transportation costs (e.g., gas or train fare), and groceries. Then divide that number by your monthly income and multiply the result by 100. If your percentage is significantly above 50 percent, it’s time to find ways to decrease your cost of living.

Move to a Less Expensive Area

The cost for food, rent, and other necessities can vary significantly across the country, so if your area is too pricey, consider moving to a less expensive one. To find a metropolitan area where prices are generally lower for everything from groceries to housing, you can use a cost of living tool. For instance, NerdWallet’s calculator uses data from the Cost of Living Index and can show you how much lower or higher your expenses might be if you were to relocate from one metropolitan area to another.

As an example, compare the cost of living between Brooklyn, New York, and St. Louis, Missouri. If you have a pretax income of $50,000 and were to move from Brooklyn to St. Louis, you’d only need a pretax income of just over $24,000 to maintain your current standard of living. In other words, it would cost you 51 percent less to reside in St. Louis than in Brooklyn. That’s quite a difference!

Keep in mind, however, that these calculators only provide an estimate of what your cost of living may be; your personal cost of living will depend on variable factors, such as the neighborhood you live in and how far out from the city center you reside.

But you don’t have to relocate across the country to be able to live on less—you can lower your expenses by moving to a different neighborhood or by downsizing to a less-expensive home. If you have extra space, you could also think about getting a tenant or inviting a friend or family member to live with you and split the costs.

Lower Energy Usage

Minimizing how much fuel and energy you use in your home and vehicle can help you save money. Try installing a programmable thermostat in your home, carpooling with a coworker or taking public transportation to your job, or using a cash-back app such as Upside to pay less per gallon. Another option is to shorten your commute by moving closer to your job, negotiating to work a few days at home, or finding a remote position. To keep your energy costs down at home, use money-saving measures like opening the blinds during the daytime, or using an energy-efficient toaster oven instead of your large appliance to reheat your food.

Pay Less for Insurance

If you have homeowner’s, health, or auto insurance, there are several ways you can lower your out-of-pocket premiums, such as by having a higher deductible (the amount you’ll pay to cover costs if you submit a claim). Additionally, homeowners can sometimes get lower premiums by adding home safety features like burglar alarms and smoke detectors, and car owners may be able to pay less by reducing coverage on older vehicles. For more guidance, consult with an insurance professional who can help you determine how you may be able to reduce your insurance costs.

Limit Your Mortgage Payment

If you own your home, your mortgage payments likely account for a large portion of your monthly costs. You could look into ways to bring down these payments, such as by refinancing your mortgage or extending the term of your mortgage period. Contact a mortgage professional to find the options best for you.


This article was prepared by ReminderMedia.

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