Saving Money Better – Focus on the Big Wins First

A lot of people set resolutions to save more money. In fact, it was the third most popular resolution for 2015, behind only “lose weight” and “get organized.” But as we’ve noted before, only 8% of people successfully achieved their resolutions. So how do we go about making sure that we are the select few who actually do save more money?

Do you focus on the Latte Factor and cut out your daily coffee? Do you drive around in search of the best deals or spend your Sundays clipping coupons?

I would argue that if you want to save the most money, you need to first look at the areas where you spend the most money.

American Spending Habits

In 2015, the average married couple without children dedicated 31.3% of their spending to housing, 16.6% to transportation, and 11.8% to food. The average married couple with children spent 31.2% on housing, 17.6% on transportation, and 13.1% on food.

Either way, these three categories make up about 60% of the average American family’s spending. If you’re looking for a place to save some money, I’d recommend starting here. It is much easier to cut spending where your spending is the highest than it is to try to squeeze savings out of smaller categories.

I would also add saving on your taxes on top of this. We pay a lot of money in taxes for the privilege of living in civilized society. This doesn’t show up in your spending because it is usually gone before you see it, but there are easy ways to cut down on your tax bill!


Let’s start with housing. Your rent or your mortgage is probably the single largest bill that you have every month. This also means that it has the potential for the biggest savings if you can find a way to cut that bill down.

Maybe you could consider downsizing. Do you have an office that is never used? Maybe a living room that is purely decorative? Maybe you have a ton of space dedicated to storing stuff that you never actually use.

A big savings win would be finding a way to move to a smaller and cheaper place. (And all the better if you sell off some of that unused stuff that was taking up extra space. You could also donate it and use the deduction to save on taxes while doing some good for others). Cutting your bill by $500 per month would save you $180,000 over the course of a 30-year mortgage. That’s a lot of lattes.

(Plus, if you invest that money in a stock market index fund, you’re looking at closer to $750,000, assuming an 8% interest rate.)

$500 per month, invested at an 8% interest rate.

Along similar lines, you could consider moving to a new neighborhood. The cost of housing varies greatly based on location. Maybe there is a house or apartment that suits your needs just as well in a cheaper neighborhood. You could even find a place closer to work and save on transportation costs.

Are you in a place where it is much cheaper to rent than to buy, like Washington, D.C.? Then it may be worth considering selling your house while the market is hot and renting for a while. As I’ve noted before, deciding whether to buy or rent comes down to a lot more than just money, but it is at least worth giving it a little bit of thought.

There are other options that may be appropriate based upon your location and stage of life. Maybe it would make sense to bring in a roommate. If your work is location independent, maybe you could look into a lower cost-of-living area.

Some of these options won’t make sense for some people. Maybe none of these make sense for you. But make sure that you properly weigh your options before dismissing them out of hand. There is a massive amount of money to be saved here!


The second largest area of expenditure is transportation. And most of this is spent on cars. With car payments, gas, maintenance, and insurance, the dollar signs start stacking up quite quickly.

Here’s an easy one: if you are trying to save money, leasing is most likely a bad idea. There are a lot of conveniences that come along with leasing that you don’t get by buying, but it is rarely a cost-efficient option.

If you usually buy new cars, consider buying used. This won’t help with the gas costs and will tend to make the maintenance costs higher, but you can save a lot of money on the car payments and the insurance by buying used.

If you usually trade your car in for a new one every two or three years, then hold onto it for longer. The biggest drop in value occurs over the first three years of a car’s life, so if you are only keeping it for three years, then you are paying for its most expensive miles and missing out on the value that comes afterward. (This is another reason buying used often makes a lot of sense).

Could you cut down on car usage? Could you walk more? Ride a bicycle? Take public transit?

If your household has two cars, how often do they both need to be in use at the same time? Could you sell one of them and become a one-car household?

As referenced above, could you move closer to work and cut out the need for a car entirely? Or move closer to public transit to decrease your reliance on your car?

Again, these won’t work for everybody, but it is worth considering each of these and determining whether any of them are options that you could pursue.


Food costs are the smallest of the big three. There is less room for savings here, but still more than most other categories of spending.

If you are a frequenter of restaurants, you could save a lot by eating at home more. This can be especially big in cities and other high cost-of-living areas where the restaurants tend to charge a lot more.

Similarly, if you buy lunch at work, try bringing your lunch in instead. You could make yourself something the night before, bring leftovers, or, if you’re lucky enough to have an office, stock a mini fridge with lunch options. This is something that I have implemented myself to great effect. I still eat lunch out at least once per week, but I save over $1,000 per year over my previous lunch habits.


Taxes are often overlooked here because they don’t feel like spending. The money is gone before you see it and you don’t really have much of a choice in the matter. The government gets to take their cut first, right?

Well, yes, but there are things that you can do to keep that money for yourself. Or, more specifically, there are things that you can do to give that money to your future self instead of giving it to the government.

If you have access to a 401(k), a 457(b), or a 403(b), then put money in it. This is money that you are giving to your future self that you are allowed to defer taxes on. In 2017, you can put up to $18,000 in one of these accounts. Depending on your marginal tax rate, you could be deferring $4,500 next year (based on a 25% marginal tax rate).

In this same vein, if you don’t have an IRA, then open one now! You can put $5,500 into an IRA each year (as long as you meet the income qualifications) and you can still put money in for 2016 up until tax day.

Finally, if you have a high-deductible health insurance plan, you have access to a Health Savings Account, or HSA. The HSA is a massive tax benefit for anyone that has access to one. You don’t have to pay tax on the money as it goes in. You don’t have to pay tax on investment gains as the money grows. And you don’t have to pay tax on the money when it comes out if it is used for health expenses. This triple tax benefit could save you a lot of money.

If you are looking to save more money in 2017, these are the areas that I would suggest looking at first. These big spending categories represent huge potential savings for most families.

Have other thoughts for saving in these areas? Think there are other areas that are more worth our focus? Let us know in the comments!


21 thoughts on “Saving Money Better – Focus on the Big Wins First”

  1. Housing (unless you are renting) and cars (unless you need new wheels) can be hard to do much about quickly, though. They are certainly worth looking at and as they come up adjusting. Food can be an ongoing struggle (it is for us.)

    If you look at quick wins, though, dropping cable plans for internet-only plans with Netflix or Hulu or Sling can net you $1000 a year or more. Dropping premium phone plans and phones for inexpensive plans and phones can net you about the same (although the exit fees on some contracts can be painful.)
    Emily @ JohnJaneDoe recently posted…State of the Blog: December 2016My Profile

    1. Agreed. The bigger wins can definitely take more effort up front and some time to engineer. In my original draft of this article I also went into cutting recurring costs, such as cable and phone bills, but ended up saving those for a future article because this one was already pretty long. I definitely agree that those can be powerful areas for saving, as well.

      Thanks for the comment, Emily!
      Matt recently posted…Saving Money Better – Focus on the Big Wins FirstMy Profile

  2. This is a good point, but the little things do add up, too. For example, eliminating the Latte Factor (buying, say, a $5 coffee each day) would amount to roughly $150 a month.

    We’ve actually focused on these big ticket items, and I do have to say that it’s been more effective at reducing our spending than the little things (although the little things do add up, so keep an eye on them).

    We moved from our $1,200/mo apartment a few years ago to a $900/mo apartment in another part of town. That was a savings of $300/mo. We also got rid of a $450/mo car payment, so there went another $450 back into our pockets!
    Mrs. Picky Pincher recently posted…My Favorite Money Bloggers, Part 1My Profile

    1. That’s great! Congrats on all of the savings! I did not intend to imply that the little things don’t matter. Rather, I was trying to suggest that the bigger things should be tackled first. I think a lot of people out there clip coupons and make their own coffee and pat themselves on the back without realizing how much money they are missing out on in these bigger categories.

      Thanks for stopping by!
      Matt recently posted…Saving Money Better – Focus on the Big Wins FirstMy Profile

  3. I love that you included taxes in here, Matt! Utilizing those tax advantaged accounts (and tax deductions too) can save a ton of money – more than most people think!

    Insurance is a killer for us on the vehicles right now – we have one teen driver and another in the next few months. I shopped around, once again, this year for better rates…but it seems as if we are already getting a decent rate. Our insurance went up $1000/year with the teen driver. But, if we were to get rid of a vehicle, this would drop. We can’t logistically do it at this time, but it’s something I’ll be looking at next year when our circumstances change.
    Amanda @ centsiblyrich recently posted…A New, Exciting Vision for the New YearMy Profile

  4. I was shocked to see how much transportation costs eat of an average income a few months back. We were definetely taking public transportation for granted and when I did the math we were conservatively saving $3,500 a year + all the time I get to read.

    Good Stuff Matt – I like your approach, take aim at the biggest savers and work you way down.

  5. My wife and I for the past four years have been maxing out our 401ks to lower our taxes which has had a tremendous impact.

    This is going to sound a bit silly but we also save money through buying gift cards on Cardpool for food. Normally we can get 15-20% off on restaurants and 5% on grocery stores through this way. While it’s not nearly as a big a cutting down on housing expenses or transportation it’s our next highest item. So whenever we can get Wal-Mart cards or our favorite restaurant we try to take advantage.

    Hope you and your family have a great 2017!!!
    Mustard Seed Money recently posted…My Goals for 2017My Profile

    1. I’ve actually looked at some of the gift card reselling sites and considered giving them a try, but have yet to pull the trigger. Do you think that having the gift cards encourages you to spend more while you’re at the restaurants or stores because it feels like free money at that point, or do you basically continue the same habits with a different source of funding?
      Matt recently posted…Saving Money Better – Focus on the Big Wins FirstMy Profile

  6. Good tips Matt! As Emily mentioned above, the housing and car situation can be a little longer term to address. I would say the food category is pretty easy to affect quickly.

    If you eat out twice a week, cut it down to one. That’s fast. Also, start taking your lunch to work each day. That adds up quickly as well. I think perspective helps on this one too. Instead of thinking of cooking as drudgery or a chore, consider it a fun new hobby and see if you do it more often and go out less! (Yes, I use these types of tricks with my kids – lol!)
    Jon @ Be Net Worthy recently posted…2016 Financial Quiz: How Do You Score?My Profile

  7. Hi Matt, very nice article. I agreed with you. In the past few years i wasted a lot of money in dinners, discotheques, and other stupid things but then i decided to save that money in order to invest them. The result is that now i have more money than before to spend for this stupid things (I won’t do it anymore), i will spend them for other more important things. Thank you for this article i found good suggestions that i will follow to save other money. Bye Matt 🙂

  8. Great info, Matt. We’ve worked hard over the last four years to cut food costs. We’re running at about 12% for our family of six. Food waste is a big one. We work hard to eat our leftovers and not throw anything away. We’re also working hard at reducing our taxable income as well by utilizing our HSA (did you know you can pay for contact solution out of it?) and contributing to IRAs.

  9. Our % are a little different just because we don’t have a mortgage and our property tax plus insurance comes to $2200 a year. We don’t have a car loan and Mr. Mt does all the maintenance. Insurance plus gas for the cars averages about $120 a month. So even though our food bill is rather low (about $500-700 for 7 people) is is a higher percentage. Having those first 2 big expenses low has been a game changer for us! That has open up so many opportunities.

  10. There are two buckets Matt – fixed costs and variable costs.

    Home and Auto would fall under fixed costs. You sign a contract (mortgage, car payments) and it is not a flip the switch decision. Anything is possible, however, there are a lot of intangibles in play when it comes to a home. Transportation, I agree, is an area where there is room for improvement.

    The vacations, work lunches, groceries, and the lattes would fall under the variable costs. You have more control over these.

    When it comes to saving money, a smart thing to do as a practice is to keep the fixed costs as low as possible. This would give us more degrees of freedom when it comes to saving money.
    Michael recently posted…What is your Delilah?My Profile

  11. These are all good suggestions to consider for those looking to be more frugal. If I was going to add to the list, I would say drink water when you eat out. Restaurants have huge markups on drinks. Soft drinks and tea can be $2.50 to $3.00 a glass and alcoholic drinks are much higher. Drinks increase the bill significantly which also increases the tip.

    I like to focus more on increasing my income than decreasing my expenses, but there is no doubt that decreasing expenses can help you get ahead.
    Dennis @ NestEggRx recently posted…Crowdfunding – The Good, The Bad, and The UglyMy Profile

  12. Very well written. This article is so relatable as almost 90% of the population does the exact same mistakes. And that is why we should first consider saving money. Focusing too much on bigger dreams and returns will lead us to spend the money in our hands. And in the present scenario where there is a market imbalance every day, saving comes first. This is because we do not know when our spent money will incur losses.
    Debarati Roy recently posted…10 Things You Need To Know About GSTMy Profile

Leave a Reply

Your email address will not be published. Required fields are marked *

CommentLuv badge