I used to hate the phrase ‘manage your personal finances’ until I completely lost track on all my savings and expenses. I used to think, what’s there to manage? I have some right now and I’ve worked so hard to get it to spend on myself and however I want. To all those big-spenders out there, I just want to say that you did not work more than 12 hours a day and so hard to just spend it on things that merely matter to you after some time. You have earned it to have that financial and time freedom, that independency, that ability to acquire valuable things, that expereinces you would want to have, that capability to support people you love, all those things that matter and add meaning to your life. When I started making money more than I had expected, I lost sight on what mattered and what did not. So, I started purchasing and shelling out on stuffs that merely added value to my living and contributed a lot towards my overdrawn bank balance.
If you’re like me who has to go overboard while shopping or buying things, you need to stop before you regret your impulsive purchasing decisions. After we develop a habit of spending more than what we earn, it becomes really hard to stop. It takes a lot of time to focus on making the right decisions in our purchasing lists. We need to build effective practices inorder to minimize our expenses and gain control over our impulsive behaviors. Doing this not only makes you a smart personal financial manager, but also helps you achieve your dreams of having financial freedom faster. I have attempted to include 10 major Do’s to cut-down expenses which have worked really well for my personal financial management.
10 Effective Ways to Minimize Your Expenses
Make a Monthly Budget
Making a monthly budget helps a lot when you’re trying to cut back and track your expenditure. You have to set a monthly budget lower than what you think is approriate for you because sometimes we can go a little over the budget and that makes a huge difference. Setting lower than your need not only helps in cutting back but also forms a discipline to stay in the bare minimum. When I was starting out this method, I had set my personal spending budget to Rs.5,000/- but I realized that I tended to go over it a little and that made by my monthly expenses upto Rs.6,000/- sometimes even Rs.7,000/-. This almost did not work so, I needed to make it to the lowest as possible to Rs. 3,000/-. Setting my budget to the lowest helped me understand my own spending habit and be more financially restraint. So, even when I went a little over the budget, it would still be under Rs.5,000/- which was my ultimate target.
If you are making a budget for yourself, make it to the bare minimum for you as much as possible and try your best to stay under it. It makes a huge difference on your habit of spending after a while.
Follow a 30 day Rule
A 30 day rule on purchasing plays pivotal role if you are an impulsive spender. When you feel like buying things online or in store, don’t buy it the moment you see it. Wait for 30 days to purchase it. After 30 days if you feel the same urge and need to buy it then you can but until 30 days do nothing about it. What happens in this process is that an impulsive buyer buys so quickly that s/he cannot see the long-term value or use of the products and services. If you wait for 30 days, you’ll have time to reflect on its purpose and how it’ll add meaning to your life. If it does, you will have time to weigh your options on similar products/ services that will serve you the same but better. But most of the time, things we buy impulsively do not add value and while waiting for 30 days, we’ll already have lost interest in it.
Be Clear on Needs and Wants
The important thing we should understand while cutting down our expenses is to be clear on our needs and wants. By being able to differentiate on needs and wants, we’ll gain an ability to control our desires on things that we barely need. When need is necessary products and services, wants are just our desires which sometimes and most of the times do not serve us purposefully. So when you feel like purchasing something, be clear beforehand if it’s a need or a want. Sometimes, wants are also meaningful but they don’t necessarily mean that we have to have them right away when we don’t feel like spending or are over the budget. You can purchase it after following 30 day rule and when it does not affect your budget.
Track Your Expenses
Knowing where and when you’re over the budget beforehand makes you a smart personal finance manager. For people like us who tend to deviate from the budget plan and spend until we’re broke, tracking where our money is over-flowing is very crucial. Over-spenders usually forget about the money and its value and do not stop until they’re satisfied with the spending. Every spending for them is justifiable even when it’s not. So, in-order to live under the budget and understand true value of your hard earned money, you need to establish a habit of recording and tracking the expenses. You can keep record of your expenses either on computer, your daily notebook that you carry around or notes in your mobile. You have to record as soon as you spend so that you ensure accuracy. Recording expenses right away helps in two ways; 1. it ensures accuracy and 2. while recording, you’ll realize how much you just spent and if that was not justifiable to your expense limit, you can easily return right away if it’s a product. There’s no shame in returning than regreting and being broke. Check your expense record daily and review it weekly.
Carry Very Less Amount
I suggest you to carry very-very less amount of money with you when you go out. If you’re going out with friends, carry the only necessary amount and try to stay within that. If you are going shopping, eating out or refreshing and entertaining activities, you need to plan your budget beforehand. You need to find out how much each activity costs and you can plan it accordingly. However, do not let your plan to cross or hamper your overall monthly budget. If you have easy accessibility to mobile fund transfers, make your banking account hard to withdraw from. This teaches you a lesson on financial restraint.
Delete Unnecessary Apps
If you’re obsessed with mobile applications and in-app purchases, you need to dump them right away. I myself have been a huge impulsive in-app purchaser and if not app, online shopper. In Covid lockdown, I shoped more than ever before. I used to obsess over these applications day and night and often ended up buying things in haste which I clearly never used or needed. When I realized how much I was spending and where, I had to make sure that it did not happen again so I made my mobile free of applications. I deleted all apps from where my money was out and over flowing. You can do the same if you’re a huge fan of online shopping. You could also deactivate your account if the apps allow the feature. This way you would not be able to use them even if you wanted. Do not re-install them no matter how hard it becomes.
Acquire a Habit of Minimalist Living Approach
Minimalistic living approach is becoming very popular these days as people are starting to realize how important it is to live free from financial stress and achieve financial freedom. This aproach of living creates habit of giving up on materialistic possession which are merely of value in our lives. We have become so greedy these days that we have a mindset to have everything others have and this mindset is hampering us from getting our financial freedom. Studies have also proved that living minimally can make people happier and more relaxed. So many people are now leaning towards this lifestyle as a matter of fact. So, if you have a habit and impulse of buying everything that your friends or relatives are, you need to stop and think if you really need it. Buying less materials and living in bare minimum not only saves you money, it also frees your time from cleaning and managing stuffs all around you. Start creating your life around this concept and build a sound financial habit Now.
Re-Use/ Recycle
This also comes under minimal living approach as a part. We tend to throw away things that barely work or does not when it can be mended and re-used. When we talk about making most of our earnings and spending less, it is one of the significant and effective ways. If you can easily re-use your stuffs – any stuff – then instead of buying brand new, mend it and start using until you get the best out of it. On one hand, this habit will facilitate you in cutting-back and on the other, it will assist you on living stress free of managing new stuff and dumping old ones. I hope we already know about the positive impacts of re-use and recycle method in the environment as well. So, it is like a win-win situation here; while you’re helping yourself on managing your finance, you’re also giving something back to the society, environment, and the world in overall.
Eat-in
Coming from a very personal place myself, I request you (all who are reading this out there) to spend very less possible eating out. We have become very reckless on eating-out habit and we’re in a verge of forgetting tastes and importance of our home cooked meals. Restaurants and eateries were introduced to change our taste buds from home cooked meals time to time and today it has become the opposite. Eating out has several disadvantages on our sides; 1. it is very expensive to eat out, 2. sometimes you cannot avoid food allergies, 3. unhealthy foods, 4. slowly creates a habit of spending more on foods, 5. Makes us lazy to do our regular and important chores like preparing our own meals. As per research studies, people spend five times more in average when they eat out. So, focus on developing a healthy habit of doing your simple home chores and saving yourself a chunk of money.
Set Different Mentality
When I say different mentality, it is regarding saving and spending. Today, many people seem to lose track of their money on things they don’t actually want. If we want to have that financial freedom, we need to think and do things differently than most people out there are. People are showing-off their brand new material possessions on social medias, internet when we should be focusing on things that matter. Our income should be utilized on stuffs and activities that add value or assists us on creating values. Money should not be recklessly spent on show-off competition of who has what and how much. If you become a part of this competition, you’re never going to win and let me tell you this “your personal wins should be personal to you”. Read, explore, expereince how to make most out of your hard earned money and learn to value its worth.
Conclusion
Following these methods, get the most value out of your money as much as possible. A saying from Brian Tracy “Money is hard to earn and easy to lose. Guard yours with care” could not be more relative. These days, saving has become very challenging yet you need to try against all odds because money can buy you freedom and opportunity to be happy. Financial freedom can truely allow you to do what you love and are passionate about in today’s time. So, I really hope you’ll start keeping track of your expenses and manage your finances effectively.
If you have gone through personal budgeting and investing yourself, comment down how you did it and how it affected your overall finances. If you like similar posts, I’d love to incorporate more in the future. Subscribe my newsletter if you like what I am offering here on my website.
