Studying your spending habits on a monthly basis is
the best way to determine where exactly you are going wrong financially and
reduce your monthly expenses. If you are not in the habit of evaluating your
spending, it is quite possible that there is exactly where you are going wrong.
As I mentioned in my previous post, Top 5 Best Ways to Save Money, if you wish to see your money accumulate, you need to be
intentional about it. You need to actually do something so that you can see
positive results. Most of our spending habits are subconscious and until we
become fully aware of what we spend our money on, we can never truly know where
we go wrong.
6
Steps to Reduce Monthly Expenses.
Step
1: Take account of all spending.
The first thing you need to do is to identify all
expenses. For one month, you will need to record all of your expenses,
preferably in a notebook. If you buy a cup of coffee on your way to work, note
it down. If you were running late and used a taxi, note it down.
At the end of your study month, sit down, go through
all your expenses and categorize them into two columns, ESSENTIAL and NON-ESSENTIAL.
Next, tally up the total amount of money spent on
each column, if the non-essentials way out the essentials- there is your
answer!
Often, I find that people are usually shocked when
confronted by the reality of their spending habits. It can be quite the
surprise realizing that you eat $200 worth of fast food per month however, don’t
worry you can only get better from there.
Step
2: Control your utilities.
Growing up, my father always insisted on us never
leaving an empty room with the lights still on.
Although I did not see the significance of this small action, I still
followed his advice albeit reluctantly. Fast forward, years have passed and I understand
what he was trying to teach us.
When it comes to cutting down on monthly expenses,
every coin counts. Save up on electricity by switching off the lights. Save up
on your water bill by having quick showers.
These small actions contribute to the larger whole. You
will be pleasantly surprised at the end of the month to find your bills lowered
even if it is by a few bucks.
Step
3: Pay off your debt.
When it comes to debt, it is ALWAYS easier to get
ahead of it- when you can. In my previous post, Top 5 Best Ways to
Save Money, I advise on the importance of including your debt in your
monthly budget.
If you intend to get rid of it, you need to have a plan
on how exactly you plan to go about doing so- which I know is easier said than
done. When it comes to paying off debt, I like to think of it as an investment
in your freedom. Being in debt is stressful and tiresome, for that reason it is
not very wise to prolong such torment. Sooner or later you will have to pay
back money owed. If that’s the case, always opt for sooner, never later.
If you think you might need professional help
tackling your debt or any financial hiccups, Financial Help for Families is a
reliable finance company that specializes in providing financial advice.
Step
4: Reduce money on transportation.
According to a recent statistical survey, the
average cost of maintaining a car is $8300! It therefore goes without saying
that the average person, working an average job earning an average wage simply
cannot afford this.
On the other hand, a whopping 95% of American
households own cars…absurd.
One sure way to reduce on your expenses is by
cutting your transportation costs. When you can, use public transport or
carpool. Save money you would have spent on fuel. If you truly wish to go
green, sell your car.
Step
5: Reduce money on entertainment.
Entertainment, every so often, is good. However, it
is even better within controlled financial boundaries. Instead of going out, I always
recommend entertaining from the comfort of your home instead. Instead of
splurging on expensive store-bought goods, how about a meaningful handmade gift
instead? Instead of going on an expensive date at an expensive dinner how about
an intimate homemade dinner instead?
When it comes to reducing your monthly expenses, you
just need to go about it cleverly. You don’t need to be frugal, you just need
to be nifty.
Step
6: Save money on food.
One of my favorite ways of saving money is by
creating a meal plan. A meal plan is a simple plan that outlines meals on a
weekly basis.
With the help of this plan, you will be able to resist the urge
to order take-out or eat out unnecessarily.
You can also save money on food by buying
non-perishable foods in bulk. Use coupons and offers where you can.
So there you have it- 6 simple steps to reducing
your monthly expenses. Feel free to share with me the steps you use to reduce
your monthly expenses, have I included any in the post above? You can also
check out Financial Help for Families, if you feel you need professional help
to nudge you in the right direction.
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