In the time of COVID-19, many of us are understandably anxious. With doomsday headlines about record unemployment numbers and businesses closing their doors, it’s difficult to escape feelings of uncertainty. 

Most of us know somebody who’s lost a job or had a salary cut, whether or not we have personally been impacted. So it’s understandable that many people are thinking about how to make more money or spend less of it.

Even if your income has not been impacted by COVID-19, boosting your savings account is never a bad idea. Reducing expenses can also put you in a place to more freely help others who may have been more severely impacted by the pandemic. 

Fortunately, reducing expenses doesn’t have to be complicated. We’ve put together some simple steps you can follow to effectively spend less money.

Understand Your Cash Flow

To effectively cut your expenses, you need to understand money going out and money coming in. If you are an avid budgeter, then you probably understand this pretty well. But if not, you’ll want to take some time to assess your finances over the last few months. 

Money Going Out 

We recommend compiling and sorting your expenses for the past 3 months to get an accurate picture of how much you actually spend in a typical month. Of course, the more data you have the better. If you use a tool like Mint or if your bank has built-in charts and categorization features, this step should be pretty easy. 

If not, there are lots of ways you can start to understand your expenses from the last few months. The easiest approach would be to download your bank statements, transfer them to a spreadsheet, and add categories as needed. 

However, if your bank does not provide itemized statements or you use cash regularly, you’ll want to supplement this data with a tool like Shoeboxed. With Shoeboxed, you can easily digitize and organize paper and e-receipts by categories. 

Money Coming In

Determining how much money you have coming in should be more straightforward for most people. Salaried workers with no additional income sources simply need to reference their paystubs. 

However, if you are a freelancer or have a variable component to your income (think tips or commission), you’ll want to work off of your worst-case scenario, or lowest possible income. If you receive tips or commission, the most straightforward way to get this figure is to work off of your base pay. For freelancers, we recommend working off of your lowest income month in recent history (think 6 months – 1 year). 

Of course, if you have recently lost your job or otherwise had a dip in income, you need to work off of your new reality. It won’t help you much to assess based on your prior income. 

Once you have completed both of these steps, you’ll have a snapshot of your financial patterns. For some people, the math may not add up, meaning they spend more money than they have coming in. If this is the case for you, you know you either have to make more or spend less.

Either way, you now have a better understanding of whether you’re operating at a net gain or loss and can take the appropriate course of action. 

Define What Is Truly Essential

Once you understand your cash flow, you need to define how many of your expenses are truly essential. If you’ve ever saved up for an emergency fund, you likely already have a calculation for what your bare-bones expenses look like. 

If you haven’t, make a list of your MUST PAY categories. Think of things like monthly bills, utilities, minimum payments on credit cards, a realistic but lean food budget, etc. This will help you understand how much money you need to live on and how much of your money going out is nonessential. 

While sticking to only essential expenses would be the fastest way to bulk up your savings account, that’s not always realistic. If you are bringing in more money than what you absolutely need to live off, you have some wiggle room for spending.

If you’re having a hard time determining what is truly essential, take a look at this guide from Ellevest

Ask For Flexibility Where You Need It

Once you have a clear understanding of how much money you really need to live on, you can start looking for wiggle room within those essential expenses. For example, if you are a homeowner, research your options for mortgage relief. You may also consider calling your credit card company and negotiating your interest rate for long-term savings.

Whether you’re dealing with rent, student loans, or credit card debt, research relief options or consider negotiating where possible. While you may find it difficult to pick up the phone and ask for help, the reality is that many landlords and lending institutions would rather make adjustments and meet you where you are than risk having you default on your payments completely. 

Cut Where You Can

Once you have a true understanding of your cash flow, know what expenses are truly essential, and have negotiated as many of your expenses as you can, it’s time to start making some cuts. 

Hopefully, you’ve identified excessive or unnecessary expenses that can be easily reduced or cut and can start there.

However, it’s not always that straightforward. For example, many people struggle with keeping their food budget under control. You obviously can’t completely cut out your food spending, so you’ll have to adjust some other way. 

Here are some simple ideas for shifts or reductions you can make in common problem areas. 

Clothing and home decor

Take advantage of resale apps like Poshmark or Depop to purchase clothing or home decor that’s new to you. While this won’t help you curb your shopping habit completely, you can rest assured that you’re saving some money. You may also be supporting people who make a full-time living off of these apps, and bonus points if you boost your income by becoming a seller too! 


Food is one of the most common areas where people overspend, especially when it comes to eating out. You may find it helpful to set some ground rules for how often you’ll let yourself order in or go out to eat. Alternatively, you can put on your chef hat and figure out how to make your favorite takeout dishes at home.

Bulk purchases

It’s no secret that you can save money on items you purchase frequently when you buy in bulk. If you take this approach, make sure to do the math (by comparing unit costs) on whether or not you’re actually saving money. You also don’t want to break the bank just to save a few bucks, so we only recommend this approach if you truly can afford the upfront cost associated with bulk buying. 

Implement a sinking fund

If you know that you won’t be able to truly resist spending in certain areas, you can try starting a sinking fund. A sinking fund is typically made up of known but irregular expenses, like trips or car repairs or clothing. You may know that these expenses will eventually come up, but you don’t know always know when. However, that doesn’t mean you can’t plan for them! Putting aside a little bit of money every week or month in a separate account for when these expenses come up can help soften the blow. This tactic can also help you prepare to purchase the things you want without having to feel guilty when you indulge. 

For problem areas where you tend to overspend, consider giving yourself a spending or frequency limit to shoot for. Maybe you will only allow yourself to spend $50 on clothing a month or to eat out once a week.

If you have a budget, you may already have many of these rules established. Even if you don’t put together a formal budget, setting these types of parameters will give you something specific to work towards as opposed to simply “reducing spending.” 

And if you find that there isn’t enough you can reasonably cut and still make ends meet, make sure you’re taking full advantage of all relief options available to you or seeking new ways to increase your income. 


Whether or not your income has taken a hit in light of COVID-19, reducing your expenses is probably not a bad idea. It can help you boost your savings in case of emergency, or put you in a place to help others who have been financially impacted by the pandemic. 

Regardless of your motivations, it’s critical that you understand your expenses before you can make cuts in a sustainable way. These simple steps can help you determine where you can afford to make cuts that will hopefully give you some peace of mind.

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