Hacking The Big 3 –Slash Your Housing, Travel and Food Costs

Pedro Braz

Last Update: February 7, 2023

When I first got interested in personal finance, I stumbled across a blog called Early Retirement Extreme (ERE).

The blogger behind the site, Jacob Lund Fisker, lives on just $7,000 a year!

Extreme frugality allowed Jacob to retire at 30 after just five years of saving.

Financial independence was something that really appealed to me, so I followed Jacob’s lead.

I shaved my head, ate bucket-loads of oats, and got around on two wheels.

After a year or so, I quit the ERE lifestyle. It wasn’t for me.

I’m still somewhat frugal – it’s in my nature – but hardcore frugality isn’t my bag.

I’m telling you this little story to let you know that you don’t need to go to the same extent I did to save more.

It’s possible to bank a significant portion of your take-home pay by coming up with creative ways to “hack” The Big 3.

What Are The Big 3?

Housing, travel, and food shopping make up the bulk of most people’s living costs.

Childcare will also be a large expense for those with children. But for the average single person or couple, The Big 3 are going to swallow most of your wage.

In Set For Life, author and host of the Bigger Pockets Money podcast, Scott Trench, reveals that the average American household will spend 65% on The Big 3 (I imagine British households will be similar):

33% housing and accommodation
17% transportation
15% food

That’s 65% of your wage gone, and you’ve still got utility bills, phone contracts, broadband, Sky TV, Netflix, Amazon Prime, gym memberships, meals out, haircuts, clothes, holidays, gifts, and… and… Saving money seems impossible after you’ve got through that list.

And if you’re working towards huge financial goals – like becoming financially independent early in life – you’re going to need to save more than just pocket change every month.

But saving half or even more of your income is possible.

Many people manage to save 50%, 60% or even 75% of their salary, often by finding “hacks” to reduce the cost of The Big 3.

Straight up, this isn’t easy. It requires giving up conveniences that you’ve become accustomed to.

Which is why we’re going to pop your frugality cherry slowly…

Start with the Low Hanging Fruit

Before you rush out to buy clippers, let’s start with baby steps.

I don’t want to scare you off from saving life-changing sums of money because you dived in at the deep end of frugality and ended up looking like this:

I’d recommend you start with trimming your budget before making significant lifestyle changes.

Most people could easily save an extra £100 a month by cancelling hardly used subscriptions, switching utility/phone/broadband providers, or eating out less.

There’s nothing to fear when it comes to trimming your budget of the “fat”.

If you cut something and find that you miss it, you can always add it back.

So, go to town and try to cut as much frivolous spending from your budget as possible.

Bagging some quick wins will make you feel good. And we want to ride that feel-good feeling as we look to make more difficult changes.

Okay, enough with the mental prep. Let’s move on to the big stuff.

5 Tips To Hack Your Housing

Move Somewhere Cheaper – This might require selling your home and moving into a rental, renting in a cheaper area, or moving to the country (but make sure lower housing costs are worth trading for longer commutes).
Downsize – Smaller places have lower rent and mortgage payments, cheaper bills, and they take less time to clean. Win, win, win.
Get A Flatmate – Sharing your living space also means sharing your bills. Sure, it can sometimes be an inconvenience, but you also might find you end up sharing with someone that’s a great company. The Rent a Room Scheme lets you earn up to a threshold of £7,500 per year tax-free from letting out furnished accommodation in your home.
Move To A Shared Flat – If you don’t have a room to rent, you’ve still got the option of moving in with someone else.
Airbnb A Spare Room – Don’t like the idea of a permanent lodger? What about hosting guests? Airbnb will require you to be more hospitable, but there’s potential to make some serious dough. Depending on where you live, it could turn into a thriving lifestyle business.

6 Ways To Reduce Your Transport Costs

Switch To A Fuel-efficient Vehicle – If you’re currently cruising around in a gas guzzler, it’s time to ditch it in favour of a wallet-friendly hatchback.
Sell Your Car – Selling your car will relieve you of the cost of road tax, insurance, maintenance, and fuel. If you ever need a car, you can rent one for the day. The money you make could be used to…
Buy A Bike – Getting rid of the car altogether and cycling (or walking) everywhere will save money and keep you fit.
Car Share – If you have colleagues that live nearby, why not suggest taking it in turns to drive to work?
Live Closer To Work – Most of us travel to work at least five days a week. The closer you are, the less you’ll spend on travel, and the less time you’ll waste commuting.
Work From Home – Work from home arrangements are now more common and doable than ever before. If you can do your job from a laptop, pitch your boss to work from home.

6 Ideas To Cut Your Food Shopping

Switch To Discount Supermarkets – Before I became an Aldi superfan, I had perceptions about cheap supermarkets. I thought they sold poorer quality products and the food didn’t taste as good. I was wrong. Not only is the quality on par with big-name supermarkets, but it’s also much cheaper. I save at least £20 a week shopping at Aldi.
Make All Your Meals At Home – Yes, it requires more preparation, but you’ll be eating healthier and saving more.
Bring Your Lunch To Work – If you don’t manage to prepare everything at home, at least bring your lunch to work. You could easily spend £5 a day on lunch, coffee, and snacks at work. That’s £25 a week or £1,200 a year. If you invested that money instead and achieved a 7% return, you’d have £51,040.61 in 20 years.
Plan Your Meals and Shop With A List – Planning what you’re going to eat for the week cuts out food waste and impulse buying at the supermarket. Once you have your meal plan, write down all the ingredients, and only buy what’s on your list.
Eat Less Meat – Not what the steak lovers wanted to hear, but reducing the amount of meat in your meals will stretch your grocery budget further.
Cut Out Alcohol – Booo! I’m not making myself popular with this list. But the fact is, even moderately enjoying alcohol (which I class as a bottle of wine or a few beers) will cost you £5-10 a week. I won’t bring out my mate compound interest again, but this relatively small expense can add up to a big chunk of cash in time.

Want more tips to save on groceries? I’ve got you covered: 10 Food Shopping Tips That Will Save You Hundreds

Wrapping It Up

There’s no doubt that hacking The Big 3 does require an element of living unconventionally, but it also doesn’t require going full-on frugal weirdo.

Combining a few of these tips may not drastically alter your lifestyle, and they could pad your pockets with an extra £500 per month. Saving £500 of after-tax income is the equivalent of giving yourself a £7,500 pay rise!

And who knows, you might even end up loving some of the changes – especially the ones that also benefit your health.