Keeping These 2 Expenses Low Has Been My Ticket to Saving Money

by Maurie Backman | Updated July 25, 2021 - First published on March 19, 2021

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A woman puts a coin into a jar labelled "savings."

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Not going overboard in two key areas helped me grow my savings.

Saving money would be a lot easier if living expenses didn't constantly get in the way. But alas, we all have our share of bills to pay, from utilities to groceries to medical expenses. And often, those bills can't be helped. After all, we all need to eat and function, and that costs money.

Still, the decisions we make about our bills can make it easier to meet our financial goals. And in my case, keeping two expenses on the low side has made it possible to build savings and enjoy other things that are important to me.

Keeping housing costs down

Housing is most people's greatest monthly expense. Knowing that, my husband and I chose years ago to purchase a home that wasn't at the top of our price range. We also chose to make a large down payment on that home to keep our mortgage payments on the low side. Doing so has bought us a lot of flexibility -- it's freed up cash for our savings, as well as for leisure and vacations.

As a general rule, it's a good idea to keep housing costs at or below 30% of your take-home pay. And by "housing costs," I mean predictable expenses. If you rent, that's the amount you pay your landlord and spend on renters insurance. If you own a home, it's the amount you spend on your mortgage payment, property taxes, and homeowners insurance.

In the decade or so since buying our home, I've been tempted to move to a larger or nicer place. And because our household income has, thankfully, increased over those years, it's been an option. But whenever I get the itch to look at other homes, I remind myself how much financial leeway I have right now by not spending a fortune on housing. That's enough to get me off of those real estate listing sites. And it helps that my husband isn't interested in moving, regardless of money.

Keeping my transportation costs low

Since I live in the suburbs, having a car is a must. In fact, in my household, we own two -- a minivan to shuttle our gaggle of children around, and a compact hybrid sedan. The sedan is more of a backup car -- we use it to run errands solo or take a single child someplace, since we can't fit all our kids into it comfortably. It's also the car my husband uses to drive to work (I work from home).

While the minivan is only about seven years old, the hybrid turns 14 this month. And it's not running perfectly. For one thing, its trunk won't open once the weather hits 70 degrees, because the seal warps, and we can't use it from June through September. It also has other minor issues that aren't a safety concern, but are annoying.

Although we could afford a monthly payment for a new car, we've decided to hang onto our hybrid as long as it runs. After all, it's already paid for. We feel we shouldn't spend $300 to $400 a month on another car when we have a "free" car at our disposal. Instead, we can save that $300 to $400 or put it toward vacations or other priorities.

It's all about choices

When it comes to saving or freeing up money, you may have options -- you may be able to cut back on a lot of smaller expenses, or slash a few larger ones. In our case, spending minimally on housing and transportation has given us the freedom to enjoy other aspects of our lives. Over the past 10 years, we've traveled, provided our kids with after-school activities, and done things that perhaps wouldn't have been possible had our housing and transportation costs been higher.

This isn't to say that everyone should underspend on housing and transportation. For some people, a more expensive home may lead to a better quality of life. In some areas, home prices are such that they can't be kept to under 30% of the typical resident's income. And your circumstances may call for a newer car for reliability's sake. But in our case, keeping these expenses down has really served us well.

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