Saving On Expenses
Welcome back to my blog, we are still in July, the national Savings month, today I would love to speak about saving on expenses. My previous post was about the concept of saving and I mentioned that savings can be done in two ways. The first is saving money for a goal and the other one is cutting down on expenses. To have a better understanding on how to save for a goal click here.
What is An Expense?
This blog is all about personal finance and financial wellness , therefore the explanation will be based on the personal expense. An expense is the cost of personal living. It is the outflow of money used to acquire personal services and products. These may include things like groceries, clothing and transport fees. There are other expenses like the maintenance cost of a credit and interest rates.
How To Save On Daily /Monthly Expenses?
The very first important thing is to know how much you are spending in your expenses. We always speak of cutting down on expenses but what would you be cutting if you do not know how much you are spending. Therefore; assuming you have a budget, go back to your budget and look at how much you are spending on your expenses. If you do not have a budget please learn how to draw one.
Once you know how much you are spending on each expense, look for an alternative product or option. Let me make an example.: Let us assume you are using R1000 for lunch money, an alternative will be carrying a lunch box to work and saving the R1000 you were using for lunch.
You could be using more money for petrol to work, you can opt for a lift club with your colleagues. Other expenses can be TV subscriptions, on takeout’s, a book club that you no longer attend, funeral covers and more.
Another way of saving on costs includes paying extra money on your personal loans or credit card to save on the interest rates.
I must mention though that when you decide to cut down on an expense it should not feel like a punishment, it should be a cut that you have made consciously because it is no longer serving you. And when you go for the alternative it must still give you the same fulfillment.
Cut Down And Commit To A Goal!
When you finally decide which expense you are going to minimize, commit the saved amount to one of your financial goals. It can be paying extra towards your debt, or starting to build your wealth for you or your children. It can be increasing your contribution towards your emergency funds.
Cutting down on expense and not knowing where the money is going or what it is doing is as good as not saving at all. One of the things I did was to take my lunch money and committed it towards one of my personal loan. I practically went to he bank and increased the instalment so that it did not become an option that can decide not to pay in other months.