Rethinking the Biggest Traditional Expenses

When you’re trying to get ahead financially, you may scan your budget to identify and trim nonessentials.

Spending categories like vacations, cafe beverages, and tickets to concerts and sporting events may all be on the chopping block. These items, however, make life enjoyable, so reducing or eliminating them can be tough. Plus, when you look at your budget as a whole, they tend to be financially minor rather than major so slashing them may not have the economic impact you want.

Instead, consider reversing the process. By turning your attention to big traditional expenses, you may be able to pay much less now and save more money for the future.

According to 2023 data collected by the salary and career website Zippia, the top five household costs are housing, transportation, food, insurance and pension, and health care. It’s time to rethink them.

1. Housing

Housing makes up 33% of the average worker’s income, comprising the biggest slice of the budgetary pie. Whether you’re a homeowner or a renter, there are a few ways to reduce housing costs — and possibly not even feel a pinch.


If you purchased your home with a loan and put less than 20% down, you’re probably paying private mortgage insurance (PMI) premiums.

Subtract the amount you owe on all loans secured by your home from the appraised value. If it’s at least 20%, consider removing PMI insurance. Since premiums are typically 0.5% to 1.5% of the loan amount per year, on a $350,000 loan you would be paying $1,750 to $5,250 per year.

Check out the interest rate you have on the loan, too, says John Araneo, CEO and founder of Crescent Harbor Private Wealth in Jersey City, New Jersey, and compare it to what is currently being offered.

“Look toward refinancing the loan when interest rates are going down,” he says. “Every percentage point will save you money.”

Also shop around for homeowners insurance and compare rates. You may not be getting the best deal. If you can find a lower rate policy that offers the same or better coverage, consider switching.


If sending that rent check every month is tough, start looking outside the box for ways to ease the struggle. You may consider getting a roommate if you have a spare room, parking on the street instead of paying for a space or moving to a new home with cheaper rent.

If comparable homes are renting for significantly less, contact your landlord and ask if there is a possibility of reducing your rent. If you’ve been a responsible tenant, they may not want to lose you and might be willing to negotiate.

2. Transportation

On average, Americans put 16% of their income toward transportation. Therefore, if you bring in $6,000 a month, you may be spending $960 just getting around.

Some ideas for reducing those costs include:

Selling a second vehicle. If you can make do with one car, consider getting rid of the unnecessary vehicle.

Trading in an expensive vehicle. Look around for affordable models. You may be able to shave hundreds from your monthly payment.

Lowering your insurance premiums. You might be eligible for car insurance discounts for being a safe driver, a student, having an antitheft device or maintaining low mileage. Money-saving expert Andrea Woroch recommends bundling insurance policies to get a better rate, paying premiums upfront instead of monthly and increasing your deductible (just make sure you can cover that expense).

Reducing fuel costs. According to a 2023 J.D. Power report, the average household spends $150 to $200on gas per month. If you have a gas-powered car you can save on fuel by carpooling, taking public transportation or walking whenever possible — or investing in an electric or conventional bike.

3. Grocery Shopping

Americans spend roughly 11% of their total income on food. Of course, you need food to survive so this big traditional expense is an essential. But you can feasibly reduce this cost.

A cashback credit card that offers especially high rewards at supermarkets can shave off some costs. The Blue Cash Preferred® Card from American Express, for example, offers 6% back at supermarkets (on up to $6,000). That’s $360 in annual savings just for charging your groceries and paying the bill in full.

Other methods to save at the grocery store include meal planning, creating and sticking to a list, signing up for store loyalty programs and buying in bulk.

[READ: How to Save Money When Grocery Shopping on a Budget]

4. Dining out

There are plenty of ways to reduce the cost of dining (and drinking) out without forgoing this expense entirely. If you have a family with young children, identify all the places you can go in your area with specials.

“Plenty of restaurants offer free kid’s meals with a paying adult, but dates and times will vary so you need to get familiar with the schedule of this offer at your local restaurants,” Woroch says. “For example, kids can eat free at Denny’s from 4 p.m. to 10 p.m. on Tuesdays.”

[Related:The Cost of Dining and Drinking Out Is Rising: How to Manage the Tab]

5. Insurance and Retirement Contributions

If you’re dedicating 12% of your income to other insurance products and contributions to your retirement plan, you’re among the average.

Can you reduce these important line items without sacrificing financial stability in the future? Perhaps, Araneo says. “If protecting your income is the goal, use term insurance instead of whole life or variable universal. It’s the cheapest type. Put your excess dollars toward savings. Right now interest rates are up on savings accounts so it makes sense.”

Regarding income you’re putting toward retirement, if you are experiencing a cash flow problem you can reduce your contribution temporarily but don’t sacrifice the free money your employer adds in.

6. Health Care

Health care comprises the last big traditional expense. The average American spends 5% of their income on it.

Never skimp on making sure you stay healthy. According to a 2022 poll by the health policy research and news organization KFF, about half of U.S. adults say they have difficulty affording health care costs, and approximately four in 10 have delayed or gone without medical care in the last year due to cost.

To keep these vital expenses to a minimum, make the most of a flexible spending account, which you can sign up for during your employer’s annual open enrollment period. You fund the account with pretax dollars to cover a wide variety of costs not covered by your insurance, including co-payments, mental and physical therapy, prescriptions, dental care, over-the-counter drugs, eyeglasses and hearing aids.

[Related:How Much to Put Into a Health Savings Account]

Other tips for keeping these costs low: Request generic FDA-approved drugs instead of name brand, and schedule routine health screenings and annual checkups to catch health problems early.

You can also weigh the benefit of a high-deductible health plan. If you believe you’ll require only preventive care, which is fully covered under most policies, the lower premiums can be financially beneficial. It’s a gamble though. If something does come up, like needing surgery, you’ll have to pay the high deductible before the insurance company begins paying.

The upside: High-deductible health plans come with access to a health savings account, which you can fund with pretax dollars and use to pay your deductible or other medical expenses.

Lowering Big Expenses Can Pay Off

It’s always a good idea to explore feasible ways to lower costs, especially when they won’t negatively impact your lifestyle. Reviewing the traditional expenses that you may not focus on during the course of a normal budgeting session can be a powerful exercise. Even better, you may not have to give up that caffe latte from your favorite morning spot.

More from U.S. News

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10 Easy Ways to Save $5 a day

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