10 Ways To Manage Your Money When Living Costs Are High

Living costs are higher now than many have ever experienced before, and people everywhere are looking for ways to bring down their expenses and set aside savings for a rainy day. The rising cost of essentials, from groceries to housing, can make it feel impossible to get ahead financially.

However, with strategic planning and mindful spending, it's possible to manage your money effectively even in these challenging times. Our tips below will guide you in the best and most effective ways to do this, helping you to prioritize your needs, cut unnecessary expenses, and find new ways to boost your income.

Key Takeaways

• By creating a budget, prioritizing essential needs, and identifying areas where you can cut back, you can take control of your finances and set aside savings.
• Cutting back on non-essential expenses, such as entertainment and subscriptions, can significantly improve your budget. Analyzing and minimizing these costs helps free up money for more critical needs and savings.
• Increasing your income through part-time work or freelance gigs and negotiating lower rates with service providers can make a significant difference. 

10 Ways To Manage Your Money In a High Cost of Living City

Costs of living are higher now than many have ever experienced before, and people everywhere are looking for ways to bring down their expenses and set aside savings for a rainy day. If that sounds like something of value, our tips below will guide you in the best and most effective ways to do this.

1. Track Your Expenses and Prioritize Essential Needs

All good money management schemes begin with budgeting. You can’t set aside money to protect yourself and your family if you don’t know how to budget, and that begins by creating lists of your income, your basic expenses, and your current expenditures.

If you’ve got more going out of your account than you have going into it, that’s a problem and requires immediate attention. You will need to look for solutions that will let you set aside more money.

The first way to begin doing this is to begin by writing out what you currently spend money on. Pull up your bank accounts and examine your monthly expenditure over the past few months. Remember to account for yearly expenses (e.g. car maintenance, annual insurance payments, etc.), so you can build these into your budget.

Next, highlight the expenses that are essential and non-negotiable. These will typically include bills, rent/mortgage, groceries, etc. These are the costs you must cover, so total them up, and you’ll have a sense of how much you absolutely must bring in each month.

2. Cut Back on Entertainment

Next, you can use your budgeting lists above to figure out where you can cut back on your spending. Eating out, going to the cinema, buying luxuries, etc., may not need to be eliminated, but these are your negotiable costs and could be reduced. Look at which ones are the least important to you, and consider getting rid of them.

Things that have a monthly cost are particularly important to examine. For example, if you have a magazine subscription, an unused account with Netflix or Hulu or another streaming service, etc., this should be considered for cost-cutting. Getting rid of these can save you a surprising amount of money over a year, making your budget look healthier.

One-off costs like eating out can also make a big difference, especially if you’re part of a big family. A takeout is a large expense that needs to be saved for special occasions, or postponed for times when your budget feels a bit healthier.

If you create a good budget in the step above, you’ll have a stronger sense of how much money you have free after the basics, and this will make it easier for you to decide what luxuries you can afford. Remember, you should be aiming to put some money in a savings account too!

3. Take on Part-Time Work or Freelance Gigs

Part-time work and freelance gigs can be excellent ways to supplement your income. Check out Fiverr, Toptal, Jooble, People Per Hour, Upwork, and more, and you’ll find people looking for individuals with all kinds of different skills.

You might think you don’t have any saleable skills, but some of the things you can do really don’t require much – you might just be assessing adverts, listening to music, or something similar. Don’t undersell yourself, though; think about unusual skills you have, or consider taking some courses to make yourself a more desirable candidate.

This kind of work can top up your monthly income and make a big difference.

4. Contact Service Providers To Negotiate Lower Rates

Some service providers will give you better rates if you take the time to give them a call, especially if you indicate that you’re prepared to shop around and swap providers otherwise. Like any other monthly expense, cutting back can make a huge difference to your budget, so it’s well worth taking the time to do this.

Many bill providers can reduce your rate or offer you a cheaper plan (especially if you’ve got services you aren’t using), so give them a call as soon as possible and see what results you get. You can even talk to your landlord and see if you can negotiate a cheaper rate per month. A small saving is still a saving, especially across a year!

Setting up direct debits and similar systems will sometimes make a bill cheaper too. Annual payments can be less costly in some cases, such as insurance. This will mean being organized and setting the money aside, but with a good budget, this should be feasible.

5. Share Living Costs by Renting Out a Room

Rent is one of the biggest expenses for many individuals, and it’s not easy to find cheap living options these days, no matter how hard you try. However, there are ways that you may be able to reduce costs here too.

A roommate is an obvious way to reduce your rent by half (or at least a percentage, depending on the setup). Alternatively, you may be able to rent out a room in your home if you’re a homeowner (or even if you’re not, but you’ll need to check your rent agreement).

Another option could be to see if any of your friends are looking for a roommate, or if any family members have a spare room they’ll rent to you for less than market rates. This can have a huge impact on how much money you spend each month – so make sure you consider whether it’s an option!

6. Use Coupons, Buy Generic Brands, and Take Advantage of Sales

Groceries are another huge expense for many households, but there are things you can do to reduce here too. Coupons need to be used with care, as it’s sometimes tempting to buy something you don’t need just because it’s cheaper than usual – but if you take a disciplined approach and only use ones that are genuinely suited to you, they can save you a lot of money.

Surprisingly, just how much coupons can help you cut down on your grocery bills, especially if you are loyal to a particular chain. Most stores now have apps that will let you save money on every shop you do.

Another strategy is to buy generic brands, rather than branded products. The store’s own options will often be much cheaper than the branded ones, so take a look at these. Frequently, you’ll find you’re paying extra for nothing, and the unbranded option is just as good!

Sales are another important aspect of grocery shopping; look out for particularly cheap goods, and stock up as much as you can to save yourself money later. Most goods are cheaper if you buy them in bulk.

7. Improve Your Qualifications To Increase Your Earning Potential

If you want to earn more money in the future, being educated is one of your best tools. Take courses and improve your skills. You don’t necessarily have to pay for this; depending on what skills you wish to improve, you may find lots of good content online. YouTube is an excellent resource.

Of course, certification is key in some areas, so consider paid-for courses too. If you’ve saved money in other areas, you may be able to afford to get certified. This can increase your earning potential in the future and can give you access to freelance work, as mentioned above.

You should think carefully before opting for paid-for courses. Research the earning potential the course will offer and weigh up your interest in the area. A software course, for example, could help you break into freelance programming, but you’ll need an interest in the area to make the most of this! The same is true for other courses.

8. Use Public Transit, Carpool, or Bike

Cars are another huge cost, and you can reduce this by looking at other transportation options. Even if you already have a working vehicle, you’ll often find that it’s cheaper to carpool, take a bus, or get a bike and cycle. You may even find that you can get rid of your car, which could represent some huge savings each year, in terms of insurance and maintenance.

Even if you need to retain your car for longer trips, using it less frequently could reduce your insurance premiums, and will help you save significant amounts of money on gas. Explore the other options before deciding you need to fire up your vehicle!

9. Build an Emergency Fund

Loans are often expensive and can be hard to come by if you don’t have a good financial history. However, a lot of people have no choice but to turn to them when an unexpected expense comes in, such as a car repair, a home repair, a vet bill, a medical bill, or something similar.

Having an emergency fund is therefore a very wise idea. You should set aside a certain amount of money each month, putting it in a savings account – ideally one with interest if possible. This will start forming an emergency fund for you, which you can then dip into when you need money for something big and expensive.

Separating this from your main fund is a good idea, so you aren’t tempted to spend the money on non-emergency items. This will make it easier to build the fund up and help you avoid taking on expensive debt in the future.

10. Explore Government Programs or Community Resources

A financial planner or a mentor can help with many more aspects of managing finances in a high-cost-of-living city, making it easier for you to get by and still enjoy life. People who are experienced in handling money can offer invaluable advice.

There are many options for this; although hiring a financial advisor might be too expensive, you may be eligible for government programs, or you might find community resources that will help you out.

Although the cost of living can be challenging to manage, many people find that the tips above help them keep their finances on track and make it easier to budget. By tracking your expenses, cutting unnecessary costs, seeking additional income, and taking advantage of available resources, you can maintain financial stability and even save for the future. Remember to explore all options and tailor these strategies to fit your specific needs and circumstances. With careful planning and disciplined spending, you can navigate high living costs and achieve your financial goals.

Note: The content provided in this article is for informational purposes only. Contact your financial advisor regarding your specific financial situation.