During tough economic times, it’s important to save money by cutting back on expenses and being mindful of big purchases. Some tips include auditing recurring subscriptions and services, cooking at home instead of eating out, and considering moving savings to higher-yielding accounts. It’s also important to consider reorganizing retirement savings and potentially converting to a Roth account. However, it’s usually best not to make dramatic changes to an investment strategy during a recession and instead consider tax-loss harvesting if necessary.
My top 3 ways to cut back and save money
1) Cook from home
With high inflation in 2023, you might be feeling how much groceries are, but it’s still cheaper than eating out
Cooking at home can help you save money as food expenses, especially those related to dining out, can be a significant portion of a household budget. According to the federal Bureau of Labor Statistics, spending on food away from home, which includes takeout and delivery, increased by 27.6% in 2021 compared to the previous year. By improving your cooking skills and opting for home-cooked meals, you can potentially save hundreds or thousands of dollars during tough times. Additionally, with the right tips and tricks, you can still eat healthy while staying within your budget.
2) Reduce your expenses
You can cut down on your expenses without compromising your lifestyle. You can consider options such as switching to a cheaper mobile phone service, a lower wifi service, bundling insurance policies, and utilizing bill negotiation apps. Additionally, it’s important to review and cancel any subscriptions or services that you’re not using, streaming might be one if you can muster it. Many households are paying for multiple streaming services, automatic deliveries, and memberships that they never use. Eliminating even a few of these recurring charges could result in significant monthly savings of a few hundreds or more.
3) Rethink big purchases
While saving money by cutting small expenses like daily coffee purchases can add up, it may not be enough to make a significant impact on your finances. Instead, take a closer look at significant expenses such as buying a second home or a new car. If you’re really thinking about buying something big or small, let it sit for 24-48 hours and see if you still need to get it the next day.
finally, in anticipation of a potential recession, it is wise to reconsider making large purchases that could lead to ongoing expenses, such as buying a boat or timeshare. Similarly, avoid luxury vacations or other expenses that could drain your savings account.