How to Save Money on Basic Needs: Tips to Thrive Instead of Survive

Hey, big spender. You know you need to cut back and save each month for the big stuff of life—like retirement and starting that dream business of yours. If you’re like most people, three things are probably responsible for holding you back. No, it's not the coffee mug you bought seven months ago. It's actually some of your essential, non-negotiable expenses. Learn what they are and how to save money on these basic needs.

What three needs separate you from saving?

It's not clothes, entertainment, travel, or even gas. It's related to your basic living needs, unsurprisingly. According to the Bureau of Labor Statistics (BLS) in 2023, most people spend around 55% of their money on housing, transportation and food, as published on Fool. That doesn’t include social security or your income taxes. 

So, what are you supposed to do—be an urban nomad that hoards stray cats? Standard financial advice shames you for spending on the extras, but in reality most folks can’t afford any extras. The cost of living continues to rise—and at an exorbitant rate in big cities like New York and San Francisco. 

How to save money on basic needs

Feeling defeated yet? There’s still a way to make this thing called life work, keep a roof over your head, thrive instead of survive, and save. You just need to learn some hacks for when it comes to the three aforementioned basic needs. Here are some realistic ways to save money on food, housing, transportation, and other essentials.

How to save money on groceries

You can still have convenience and save money by making a few different choices in ways that aren’t typical to the “no Starbucks for you” advice. Coffee saves lives; it’s a non-negotiable. So, what to do instead?

Reassess some of your spending habits. The significant part of what hurts your wallet is miscellaneous spending on groceries, such as snacks and premade meals. You may also want to skip the supplements, too, unless you have a specific dietary restriction or condition you need to accommodate.

Choose your convenience costs wisely by meal planning. Make a grocery list and stick to it. Here are some other things to try:

• Use coupons: Clipping coupons is still a thing, and you can reduce your grocery shopping costs by simply taking the time to look for digital coupons and physical coupons in the mail. 

• Sign up to loyalty programs: Most grocery stores have loyalty programs that offer member-only discounts. Registration is usually free, and the discounts are automatically applied at checkout.

• Join wholesales clubs: If you have a family or regularly buy specific products like milk or rice, shopping at a wholesale club and buying in bulk can reduce your grocery bill, as it will take weeks before you have to repurchase these items.

• Buy items on sale: This may sound obvious, but make an effort to buy items on sale. It's easy to get used to buying the same products over and over without taking the time to compare prices and perhaps find a better deal.

• Buy from generic brands: We all have a favorite name-brand bread or peanut butter, but they're not always the cheapest options. To make grocery shopping less expensive, look for generic brands, which are often more affordable.

• Compare prices: Again, it's worth taking the time to compare prices between different grocery stores. Even small differences can add up when you're buying multiple items, helping you get a better deal overall.

• Bring a reusable bag: Stores like Target offer discounts to customers who bring their own reusable bags when grocery shopping. Discount rates may vary by store and location, but you can save up to 10% on your total purchase.

• Use cash back apps: Sometimes you can't get an upfront discount, but you can receive a portion of your total purchase back through cash back apps, like Rakuten and Ibotta, to name a few.

How to save money on transportation

If you're looking into buying a car, shop around for reasonable rates and terms you can pay off in four years instead of six. Put as much money up front as possible on the car. While you need a reliable vehicle, you don’t need to commit financial suicide to get or maintain one. Cars typically depreciate 40% in the first five years, so don’t be afraid to buy used (aka “pre-owned). Get wise in mechanics—or bring a friend—and buy what you can afford.

If you already own a vehicle and it's getting costly to use and maintain it, here are a few alternatives and solutions to try:

• Use a bicycle: Depending on where you live and work, biking is a great way to save money on transportation. Bicycles are low maintenance, especially when compared to cars that need gas and periodic repairs.

• Public transportation: If your city has a good public transportation system, consider using it to commute to work and driving more sporadically. This will save you money on gas, parking, and vehicle maintenance.

• Carpool: If biking and using public transportation isn't an option, try carpooling with coworkers who live nearby. You can split the costs of gas, making it more economic for both you and your coworker. 

• Car wash: Another great way to save money with your car is to skip the car wash and clean it yourself. If you're not sure how to do it or what products to use, there are plenty of tutorials on YouTube and TikTok.

• Insurance: To save money on insurance, shop around and don't be afraid to ask for discounts. Some companies offer better deals for safe drivers and drivers with low mileage, for instance.

How to save money on housing

Look for a home that meets your standard of affordability and comfort. The general rule of third has always been to keep costs at 30% or less of your annual pretax income—but a quarter or less is even better. Even billionaires like Warren Buffet keep their housing costs low—Buffet keeps it at far less than 1% of his total wealth. If only more one-percenters or four-percenters thought that way.

For renters, downsizing is often the first measure to reduce living expenses. If possible, consider moving to a less expensive neighborhood or city. If moving is not an option, finding a roommate can also help. By splitting rent and utilities, you'll be able to save a few bucks each month. 

How to save money on electric bill

When it comes to reducing the electric bill, it can get tricky since we use electricity for almost everything, from charging a cell phone to heating food in the microwave. But it's possible to save a few bucks without going crazy over the usage of every little appliance in your home. Here's a list of key saving-tips to consider:

• Use LED bulbs: You'd be surprised how simply changing your regular light bulbs to LED bulbs could make a big difference in your electricity costs. Incandescent bulbs use up to 80% more energy than LED bulbs.

• Unplug electronics on standby: If you're the type of person who leaves your TV and video game plugged all the time, you might want to change this habit. While it may not seem like such an economical measure in the beginning, over the long term, it can lead to significant savings.

• Use the most efficient appliance: Some appliances are faster than others yet perform the exact same job. Think about the time difference between warming food in the oven versus the microwave. Whenever possible, choose the faster-working one. 

• Recycle old electronics: It's proven that older appliances consume more energy. If you can afford to buy newer ones, it might be costly initially but will save you a lot of money down the road.

• Do an energy audit: If you can, schedule an energy audit to identify non-obvious ways your house may be wasting energy. Some utility companies offer this service for free.

• Turn your lights off: Your parents were right: Remember to turn your lights off whenever you leave a room. During the day, take advantage of the natural light as much as possible.

Bonus tips on how to save money in general life necessities

Here are some extra tips on how to save more money on essential expenses and achieve a more balanced financial life:

Optimize your internet plan…

Having an internet plan is essential. However, if you don't work from home or have a big family, you likely don't need the most expensive internet plan. Contact the company and negotiate a more affordable option.

…and your cell phone plan 

Just like internet service, we all need a mobile phone to stay connected with the outside world. However, your phone plan doesn't need to be the most expensive on the market to do its job well. If possible, switch to a cheaper plan.

Use water efficiently 

In addition to taking shorter showers, you can save money on water by updating old and outdated appliances like dishwashers and washing machines to newer, more efficient models. Make sure your shower head is also economical.

Cut unnecessary streaming services

These aren't real necessities, but many people incorporate them into their lives—and that's OK; you deserve to relax with a movie. Just take a look at how many different streaming services you pay for and how often you actually use them. Cutting off excessive subscriptions can reduce your expenses, and the extra money can be used for better purposes, such as an emergency fund or to pay off debt.

In conclusion

It’s down to your choices, and what those “experts” say you should cut back on isn’t always accurate. We live in a society that burns the midnight oil to keep up with everything new and shiny, but in reality, most people burn that oil and put their noses to grindstone just to survive.

Staying on top of all of these expenses can be challenging. If you need help tracking your expenses, consider using a budget app. It will handle all the math for you; your only task is to take notes of your weekly and/or monthly expenses. You can also set savings goals, which can give you extra motivation to make these changes in your life and spending habits.

You can thrive, save your hard-earned cash and probably retire at a reasonable age by cutting back on your housing, transportation and food costs. Put it in your pocket and never look back.