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

When I first got into personal finance, I came across a blog called Early Retirement Extreme (ERE). Its author, Jacob Lund Fisker, lived on about $7,000 a year. Extreme frugality let him retire at 30 after just five years of saving.

Financial independence appealed to me, so I followed Jacob’s lead. I shaved my head, ate bucketloads of oats and got around by bike.

After a year or so, I gave up the ERE lifestyle. It wasn’t for me. I’m still fairly frugal by nature, but hardcore frugality isn’t my thing.

I’m telling you this so you know you don’t need to go as far as I did to save more. You can bank a large share of your take-home pay by finding creative ways to “hack” the big three.

What are the big three?

Housing, transport and food make up most people’s living costs. Childcare is also a big cost for parents. But for most single people and couples, the big three take most of their pay.

In Set for Life, Scott Trench says the average American household spends about 65% of its budget on them:

• 33% on housing
• 17% on transport
• 15% on food

UK figures look similar. In the year to March 2025, the average UK household spent £676.60 a week, according to the ONS Family Spending survey. Transport was the largest single category at £96.40 a week (14%). Housing, fuel and power came to £118.40 (18%), but that figure leaves out mortgage payments, so homeowners with a mortgage spend more.

After the big three, you still have energy bills, phone contracts, broadband, streaming subscriptions, the gym, meals out, haircuts, clothes, holidays and gifts. No wonder saving feels impossible.

If you’re aiming for big goals, like financial independence at a young age, you need to save more than pocket change each month.

Saving half your income or more is possible. Many people save 50%, 60% or even 75% of their pay, often by cutting the cost of the big three. It isn’t easy. It means giving up some comforts you’re used to. So let’s start slowly.

Start with the low-hanging fruit

Before you rush out to buy hair clippers, start with small steps. I don’t want you to dive in at the deep end and give up after ending up looking like this:

Trim your budget before making big lifestyle changes. Most people can save an extra £100 a month by cancelling subscriptions they hardly use, switching energy, phone or broadband deals, or eating out less.

There’s nothing to fear. If you cut something and miss it, you can always add it back. Quick wins will make you feel good, and you can ride that feeling into the harder changes.

Right, enough mental prep. On to the big stuff.

5 ways to cut your housing costs

1. Move somewhere cheaper: this could mean selling and renting, renting in a cheaper area or moving out of the city. Make sure the savings are worth a longer commute.
2. Downsize: a smaller home means lower rent or mortgage payments, cheaper bills and less cleaning.
3. Take in a lodger: sharing your home means sharing your bills. It can be inconvenient, but you may end up living with great company. The Rent a Room Scheme lets you earn up to £7,500 a year tax-free from letting furnished accommodation in your home. Check with your mortgage lender or landlord first.
4. Move into a shared house: if you don’t have a spare room, you can move in with others instead.
5. Let a spare room on Airbnb: don’t fancy a permanent lodger? Hosting short-stay guests takes more work, but it can earn good money depending on where you live. Check your mortgage, lease and local rules first. Short-let income can also fall under the Rent a Room limit if the room is in your main home.

6 ways to cut your transport costs

1. Switch to a cheaper car: swap a fuel-guzzler for a small, efficient hatchback.
2. Sell your car: no more road tax, insurance, servicing or fuel. If you need a car now and then, hire one or join a car club. Use the cash from the sale to…
3. Buy a bike: cycling or walking everywhere saves money and keeps you fit. Ask your employer about the Cycle to Work scheme, which lets you buy a bike through salary sacrifice.
4. Share lifts: if colleagues live nearby, take turns driving to work.
5. Live closer to work: the nearer you live, the less you spend on travel and the less time you lose commuting.
6. Work from home: since April 2024, employees have the right to request flexible working, including home working, from their first day in a job. If you can do your job from a laptop, ask.

6 ways to cut your food shopping

1. Switch to a discount supermarket: I used to think cheap supermarkets sold worse food. I was wrong. I became an Aldi fan and save at least £20 a week.
2. Cook every meal at home: it takes more planning, but you’ll eat more healthily and save money.
3. Take lunch to work: it’s easy to spend £5 a day on lunch, coffee and snacks, or about £100 a month. Invest that £100 a month at 7% a year instead and you’d have about £52,000 after 20 years, before fees and inflation.
4. Plan your meals and shop with a list: planning the week’s meals cuts waste and impulse buys. Write down the ingredients and buy only what’s on the list.
5. Eat less meat: not what steak lovers want to hear, but cutting back on meat makes your food budget go further.
6. Cut back on alcohol: I’m not making myself popular here. But even a bottle of wine or a few beers a week adds £10 or more to your shopping bill. Over the years, that small cost adds up.

Wrapping it up

Hacking the big three means living a little differently, but you don’t need to become a frugal extremist.

Combining a few of these tips may not change your lifestyle much, yet could save you £500 a month. That’s £6,000 a year of after-tax money. For a basic-rate taxpayer paying 20% income tax and 8% National Insurance, it’s like getting a pay rise of about £8,300.

You may even end up enjoying some of the changes, especially the ones that are good for your health.