Increase Savings Fast by Reducing These 3 Big Expenses

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Saving more money can sometimes seem impossible, but with the right saving strategy, you can save a lot of money. I like to focus on the 3 big expenses – housing, transportation and food – to save more money fast.

In this post, you’ll learn how to save more money fast and increase your savings by focusing on these 3 areas of spending to improve your financial situation.

There are a number of ways for a person to improve their financial situation: increasing your income, increasing your savings rate, decreasing your expenses, or getting a windfall, to name a few.

My goal is to increase my income, though I’m always cognizant of the big three expenses: housing, transportation, and food.

These are called the big three because, typically, they will be your three biggest yearly expenses (shocking right?). Reducing expenses in these areas will have the biggest impact on your financial situation.

Yes, it’s easy to look at that $4 latte each day and think dropping that will help reduce your expenses, but honestly, $4 a day is $120 a month – not a crazy amount of money.

Switching houses or apartments could result in a $500 per month saving with little to no effort – and you’re still caffeinated. 🙂

I believe we all should be cognizant of these three expenses.

Here are some tips and tricks for saving more money on your three biggest expenses.

How to Reduce Housing Costs

In real estate, the main determinant of housing cost is location.

“Location, location, location!” you will hear, and it’s true.

The areas where there is higher demand, due to better schools, better jobs, and better attractions, will be more expensive than areas where there is lower demand.

An obvious way to reduce your housing cost is to downsize to a smaller house or apartment.

In the metropolitan area I live, a 3000 square foot house might cost in the range of $350,000 to $450,000.  A 1500 square foot house, on the other hand, might cost in the range of $200,000 to $250,000.

This immediate cost savings of $100,000 to $200,000 adds up quickly when you consider savings on interest, property taxes and insurance.

For a 30-year home mortgage at 5% interest for $400,000, you can expect to pay nearly $375,000 in interest over 30 years.

Compare that to a $200,000 home, also at 5% interest and over a 30 year period, and you will only end up paying $186,000 in interest.

That’s a savings of nearly $200,000 over 30 years – just in interest!

Another way to reduce housing costs is to share your housing space with roommates. When you are single, this is easy – just grab a friend or two and divvy up the rent and utilities such as water and electricity to share with your friends. Learn how to calculate electricity bill to monitor your monthly power consumption.

If you are married, and/or have kids, then it might be a little bit more difficult to get roommates. Luckily, there are other ways to share space, while also reducing your housing costs.

House Hacking

I’m a huge fan of house hacking. I bought a single family house in 2015, and rented it out to three friends while I also lived there.

Because of this, I earned over $39,000 in 2 and a half years – just by house hacking!

While this sounds impressive, there have been dozens of other more successful house hackers.

One of my fellow personal finance and real estate bloggers, Guy on FIRE, has amassed a nearly $500,000 net worth by age 30 through house hacking and real estate.

By buying a multi-unit property (such as a duplex or triplex), you can have the privacy of a single family home, and rent out the remaining units to cover your mortgage and reduce your housing costs.

Using AirBnB

Another way to save more money on housing costs is to rent out your unused space through AirBnB.

I’ve never stayed in an AirBnB and I’ve never personally rented out space using the platform, but I know of many people who are successfully doing this. One of them is my friend Financial Panther, who rents out one of his rooms on AirBnB.

He makes a pretty good amount each month, which is helping to cover part of his mortgage.

There are many ways to reduce housing costs, and depending on your level of comfort with renting out your house to others, there are various solutions you can try.

biking to save moneyHow to Reduce Transportation Costs

Unless you work from home, or are a hermit, there’s a good chance you use some form of transportation. Going to work, going to the gym, traveling to see friends and family – there’s always somewhere to be and people to hang out with.

Saving money on transportation is similar to housing in that if you want to own a car, buy something that is used and affordable. You’ve probably heard that when a new car rolls off the lot for the first time, the car loses 10%+ in value, just like that.

Therefore, if wealth is a goal of yours, buying a new car for $40,000 might not be the best choice, since in the first day of driving, you lose $4,000. Buying a used car for $20,000 or less might be a better choice for reducing expenses in the long term.

I bought a used 2014 VW Jetta for $13,000. It runs like new, and gets 37 mpg on the highway. I love it and since I own it in full, and drive it a few thousand miles a year, I’m going to get my money’s worth over 15-20 years. I could have bought a nicer car, but then I might still be paying for it many years later.

Riding Bikes and Taking Public Transportation

As the push for green travel takes place in many cities around the world, biking and public transportation continue to be a great option for people who want to reduce transportation expenses. I take the bus to work every day and pay $50 a month for the bus pass.

If I was going to drive, this would result in wear and tear on my car, $10+ a day in parking costs, and additional gas costs from filling up once or twice a week. All of this totaled up could add a few hundred more dollars to my monthly expenses.

Instead, I’ll pay my $50 and get a little bit of reading done on the bus!

Other people bike every day to work, get their exercise, and save the $50 I’ve been spending monthly to further save money on transportation costs!  I applaud the people in Minnesota who bike to work in the freezing temperature. It’s bad enough standing at the bus stop in 0 degree weather!

By driving something a little more affordable, using public transportation or riding your bike, you can reduce your transportation expense, which can be another way to increase your savings fast!

How to Reduce Food Costs

Reducing food costs can be as simple as eating out less.

When you go out to eat, there are a lot of added costs hidden within the price you end up paying: the service, the overhead of the restaurant, the tip and any additional tax.  I know this, and we all know this: eating out consistently is expensive.

I eat out for lunch at work. Typically, I go for a fast food type place (think Chipotle or something similar) and look to keep my daily lunch expense under $9.

This quickly adds up over the month (20 working days times $9 each lunch is $180).  Throw in any snacks I have at work, and during a working day I will spend $10 or more.

I generally do not go out to eat for dinner, and don’t drink much anymore. I’m saving some money there, but those work lunches are my main deterrent to having a bare bones food and drink expense (and maybe I’d have bare bones then!)

Like I said, cutting the number of times we eat out a month will reduce your food costs. By eating in, cooking meals in bulk or meal planning, you can save a few hundred dollars a month.

There are many resources out there for how to meal plan, bulk cook, or couponing to save at the grocery store, and I won’t go into these – I just want to make you aware that these are possibilities to reduce your food costs.

How Personal Finance Blogs Community Members are Managing their Big 3 Expenses

One of the great things about having readers is being able to ask them about their strategies for financial success.  A number of people contributed to the question of how they are managing their three big expenses.

Cynthia, one of my readers, said the following about housing expenses:

Our wealth began to snowball when we paid off our mortgage early. There is nothing like being truly debt free.

Congrats, Cynthia, you are one of the lucky ones! Not paying interest to the bank can add up in your brokerage or savings account!

Gwen, a blogger at Fiery Millennials, uses a three-prong strategy to attack these three major expenses:

I’m house hacking, I meal prep during the week, and I drive a 2005 car as to not be indebted to the bank and put my cash to good use in the present.

Another house hacker! I’m so impressed!

Dom, a blogger at Gen Y Finance Guy, uses a term he calls “Relative Frugality” to look at his three main expenses:

We simply practice what I have coined ‘Relative Frugality’. We don’t spend so much time managing the expense side of the equation as we focus on increasing the income side of the equation. The overall goal is to save 50% of our after-tax income and live on the other 50% guilt free. It’s a free ticket to enjoy lifestyle inflation. One thing we did intentionally do on the housing front was bought a house that at the time was 50% less than the bank said we could afford, but was still 3X the size we probably needed. The mortgage with insurance and property taxes makes up less than 10% of our gross income.

It’s cool seeing what different goals and scenarios people have, and how they are applying the strategic plan to their situation!


Being aware of how much you are spending on your three main expenses is step 1, and looking for ways to reduce these costs will help you get a handle on your expenses and increase your savings fast.

Moving to a cheaper apartment, house hacking, cooking in bulk and riding your bike or the bus to work are all great ways to reduce your expenses quickly.

As a current bus rider and previous house hacker, I’ve experienced the great benefits of these cost-cutting tactics.

I hope you can take what you’ve learned here and make some changes to see bigger savings in your future.

How to increase your savings fast by reducing these big expenses
How to increase your savings fast by reducing these big expenses