Several things give people headaches when it comes to personal financial management. One of those things is monthly expenses. The core reason why most people lament on how paltry their monthly incomes are is due to the menacing demand for monthly expenses. Interestingly, monthly expenses are a function of one’s individual choices. That basically means one can make adjustments to their lifestyle that culminates in manageable monthly expenses. In this article, I shall be dealing exclusively with that – ways of reducing your monthly expenses.
First Things First – Make Up Your Mind
Before we even start discussing anything you must make up your mind. Any aspect to do with financial management stems from a paradigm shift in one’s way of thinking. If you do not realize the need to reduce your monthly expenses then you can never prime yourself into the needed mindset. So you must start by making the realization and decision that I have to do something about my monthly expenses. The biggest hurdle in all this is living to please people or give a certain impression of affluence. That is the biggest thing anyone willing to embark on this journey must let go off.
Once you have mentally conditioned yourself like that you can then set goals or targets. Essentially you can start even with very simple goals e.g. wanting to reduce your monthly expenses by 40 per cent or by an actual amount. This will help you plan and strategize on how you are going to reach that goal.
Budgeting And Tracking Expenses
The age-old principle of budgeting still matters today. The reason why it is pertinent is that it lays the foundation for easily tracking expenses. By tracking expenses I am referring to taking note of every purchase you make. This helps to build up data that you can then analyse to see which expense or expenses are guzzling your finances. Earlier I mentioned the issue of setting goals and once you have a working budget you can track expenses. In all that it also becomes clearer on how you will review your expenses in light of your goal(s). Tracking of expenses must be a daily thing – you should get to a point where you know how much you spend on a typical day. You will be amazed at the realizations you will stumble across through this simple principle.
Review Some Expenditures
This is the heart of reducing monthly expenses. You will have to be ruthlessly honest with yourself and make some drastic changes. There is no limit as to the things you can change here but I will discuss some of the areas so that you get the picture.
This depends on some variables but I will just highlight some of them to drive my point home. Let us suppose you have a personal car and you drive to and fro work daily, 6 days a week. It could be possible that commuting could be way cheaper than fuelling your car. There could also be a scenario where you commute or even drive to work but the distance being walkable (or even to cycle). The no-so-rosy alternative might actually be cheaper. The bottom line is you must review your transport expenses and explore cheaper alternatives.
There is also so much to talk about here but I will point out some scenarios to paint you a picture. Typically you might be spending US$1 daily to grab yourself some lunch. Assuming you work 6 days a week that translates to US$24 on lunch alone per month. Consider the possibility of bringing home-cooked food for lunch instead. That will definitely be cheaper – some people even bring leftovers from the previous day or night.
Then we have the issue of eating out i.e. going to restaurants and the like. There really is not anything wrong with occasionally doing that but you must be frugal at times. At times preparing a nice meal at home can be a cheaper and more fulfilling alternative. These are some of the things you must look at in your quest to reduce your monthly expenses.
This starts from the actual rentals – relook at this. If you are feeling the brunt of monthly expenses then chances are your rentals might need a review. There are scenarios where you might have to move out and move into a cheaper place. You also have to look at things like power consumption at home. I once did an article on how to reduce your monthly electricity bill – this plays into home expenses. Alternating between electricity and the use of LP gas can contribute to a reduction in monthly expenses. You might also have to rethink things like using air-conditioning, replacing power-hungry appliances with energy-efficient ones and so on.
Be disciplined and diligent when it comes to spending with prior planning. One of the biggest issues here is impulse buying – do not just buy without due thought. There is a particular principle I love when it comes to thinking through an expense before making it. Here is how it works: Look at your monthly income or salary and calculate how much you earn per hour (for some you probably might already know this). Once you have done that look at the expense you are about to make.
For instance, you want to buy a pair of shoes for US$96 (yet your hourly salary rate is US$1). Let us also assume you work 8 hours per day, 6 days a week. Compare the expense in light of your hourly rate. Given this example, those shoes would be worth 12 working days. Ask yourself; are these shoes really worth that much to me? That interesting principle can help you avoid unnecessary expenses.
I am sure you will find this article very useful. This article is for everyone because we all wish to keep our monthly expenses in check.