The 4 steps to reduce your expenditures
In order to reduce your expenses there 4 key steps you have to follow:
1. Awareness | Are you aware of all your expenditures? Some people go from pay check to pay check and they don't
even know what they spent their money on. That's bad. The first step is awareness.
What do I spend my money
on? Ask this question to yourself and (important) write the answers down. (i.e. food, rent, bills, clothes, etc)
2. How much? | Write next to the each category the amount of money that you spend monthly on it. (I.e. Rent = 405 GBP,
Bills = 75GBP, etc.)
How much do I spend on...? If you are not able to write a concrete figure, it's quite
probably you can reduce the amount of money you are spending on this category.
3. Cutting off | You've identified and quantified your expenditures. Now is the moment to reduce the amount of money
that you spend in some categories. This task seems harder than it actually is, once the expenditures are identified and quantified,
eliminating some costs is a matter of personal choice.
Could I spend less on...? First categories you should take into account are alcohol, cigarettes and gambling. You'll save
money and quit bad habits at the same time.
4. Control | You've identified, quantified and cut off the unnecessary costs. You've made it. Now stick to it. Design a monthly
budget according to the three previous steps.
Be realistic If you push it too much you'll struggle and give up after the first month. You want to reduce costs,
but you want to enjoy life at the same time. So be realistic and design a budget that you will feel comfortable with.
Making some available money
There are 2 main benefits of reducing your cost of living:
First: you need less money to live, that means your pressure to make money is less than it was. If you would earn less, your difficulties to survive would be less.
Let's say your company pays you $4000 a month and you spend $4000 a month, if they fire you, you are f... in trouble. But if your monthly spend is $2000, you'll have one extra month to look for a job, since you saved $2000.
Second: Good news! If you've reduced your costs you've already increased your income. Now you have an extra money that you didn't have before. What to do with it? The answer to this question is the choice between growing rich and staying where you are. Go ahead and increase your income.
The Spend less handbook
Rebecca Ash gives the best tips on how to spend less money and do not loss quality of life, or even improve it.
The Spend Less Handbook: 365 tips for a better quality of life while actually spending less
This is the best book I've read on the topic so far, and believe me, I read a few on this topic.
First things first: pay your debt off
If you are in debt, pay it off with the available money you made by reducing expenses. You can be sure that's the best investment you can do if you have any debts.
Find out why paying off debts is the best investment.