Where to Cut Down on Your Living Expenses
To paraphrase Charles Dickens, the 19th century British author, “Earnings $500 per week, expenditures $495, result happiness. Earnings $500 per week, expenditures $505, result misery.” The availability of credit in today’s society may delay the misery, even by years, but it will catch up with you.
If you are living beyond your means, you are potentially setting yourself up for serious future problems. You may overcome this through dramatic income increases. This is in fact normal for students, amassing debt in the form of student loans. After graduation, there is the hope of high-paying careers enabling the clearing of debt and then the development of wealth.
However, for those who are already in their profession, expenditures exceeding income is a problem that requires attention. And if increasing income is not an available option, then looking at the ways and means of reducing expenditure becomes a necessity.
To do so, the first thing you need to know is exactly what your income is. Most people can determine this relatively easily, but for those on variable incomes it can be quite difficult. Total your income over the last 12 months and divide it by 52 to determine your average weekly income for the previous year. Then do the same for each quarter of the previous year to determine income variation. For each 3-month period, total the income and divide by 13. This will indicate if you are experiencing income growth, stability or, hopefully not, reduction.
Now you need to determine your expenditure. Record everything you spend money on, no matter how trivial. “A penny saved is a penny gained” is not a cliche for no reason. That coffee you purchase on the way to work each morning amounts to a considerable sum over a year. You should do this for at least a month.
Once you have determined both income and expenditure you can see what the discrepancy is. Even if your income exceeds your expenditure, you may want to decrease your living costs to increase the funds available for saving and investment.
So, in what areas is it possible for you to reduce your living costs? For most people, the answer is actually in nearly ALL areas. Taxes are about the only area that is beyond your control. However, the areas where you have made a conscious choice about your expenditure are unlikely to provide more than minimal savings. It is the areas where you spend relatively automatically that the greatest savings can be made, so let’s consider these.
Ready-made, pre-packaged and fast food will cost you more than buying meat and groceries to prepare yourself. Learn to cook if you don’t already know how, self-prepared food will not only be cheaper but usually healthier for you, and once you get practiced, it will taste much better too. You can cook to your own preferences rather than eating based on the preferences of someone else. Dining out is comparatively expensive, only do so to treat yourself or loved ones, rather than as a regular occurrence.
Consider taking pre-packed lunches with you to work. Alternatively, eat a large breakfast at home, purchase only a light lunch, then have a reasonably sized meal at home in the evening. Try and arrange to indulge in most of your daily coffee consumption at home unless it is provided free at work, in which case drink it ALL there.
For those living in rural areas, their private vehicle is almost certainly essential. In urban areas, it is nearly always a matter of convenience or preference, rather than necessity, unless you work shifts. The costs of owning and operating a private vehicle, even a motorbike, will be considerably higher than using public transport. Purchase price, maintenance, insurance and fuel costs will contribute significantly to your expenses. You can do, not only yourself but the environment, a considerable favour by dispensing with your vehicle. Even if you can’t bear to part with it completely, consider using public transport for your travel to and from work, or join a carpooling scheme.
If you live in an intensely urbanised area, it may simply be a matter of reducing taxi use and increasing bus use. But, please, always evaluate each travel situation as your personal safety is far more important than reducing your travel expenses.
Reduce water usage by taking quick showers rather than baths. When it comes to laundry, wait until you have full loads rather than partials. Ensure fittings are tight, drips will add up over time.
Turn electrical equipment off at the wall when not in use rather than leaving it on standby, this will save you approximately 8% on your electricity bill. Only have your TV on when you are actually watching it, rather than as a constant background. Power your computer off when not in use. Replace light globes as they expire with energy efficient varieties, they cost more but they last considerably longer and use far less electricity.
Shopping and credit cards:
Shop specifically for items you need, estimate costs beforehand and only take the money required. This will help you avoid impulse buying. Only take a credit card if absolutely necessary. Pay off your card completely when you receive each statement to avoid interest charges. If this is not possible, pay as much as you can.
Establishing and sticking to a budget will help you immeasurably but can be astoundingly difficult so you may like to consult friends or professionals for advice or support. You can do it! And the release from the stress engendered by financial strain alone would be worth the effort.
Author: Perry Mccarney