How to lower your expenses month by month
Welcome dear readers to another helpful article from your friend Tanja!
I would like to help you saving money. Now I am going to show you step by step how to do it. I hope you will enjoy it.
Part 1: Find out how much you are using
Many people do not understand that the simplest method to save money is to just lower the expenses. Here is how:
In order to find out how to save money, you must first analyze how much you are using right now and for what:
Write down what you use every day. This will take some discipline, I know that. So you gotta make it as easy as possible for you to write it down. If you are using your laptop/computer every day, then it is good to have an excel sheet ready and always open when you open your laptop. If you feel more comfortabe with a real paper version, then print the excel sheet out or use a small booklet. That way you can write down immediately the amount of money you are using.
Act normally, as if you were not writing it down and spend the money you would usually use. Remember, we want to find out how much you are actually using. Cheating now, will be contra productive.
Attention: do this EVERY DAY, or better: even several times a day. Try to write it down immediately, otherwise you will forget it. Do not procrastinate this one, because - and this is really for helping you - you will forget what you used 3 days ago. You will, trust me on that one. For example.. you will forget that you paid a small amount for a coffee at the library cafeteria which you did not get a reciept for. Now you might think: so what, that small amount.... but that will happen every day and if you froget it, falisfy your results.
Why is that important?
Because you want to know how much you are using and for what you are using it. That way, you can find out, WHERE you can save.
I will help you here and tell you how i divided my expenditures. I divided them into these categories roughly. It depends on your lifestyle of course too, you can clearly see that I am a student here
Rent, Water, Heating, etc
Transportation / Car
You do not need to use the same categories, but do classify them. This will help you alot.
Please do this process for a period of about 3 months. Yes, it is necessary! Do you already feel like giving up now? No, give it a try. Maybe 2 months will be enough for you already to figure out where your money goes each month. Why does it have to be for so long? Because you will have different expenses each month. Some bills come once a month, some every 3 months. In one month you will spend more on one category, in the next month less. Etc..
Part 2: Now that you know what you are using: where can you go lower?
Great, you survived the hard part. Congratulations on those of you who haven´t given up yet. Please write down the monthly amounts in each category and compare them. (Therefore it is easier with Excel, the calculation part is simple). Now think where you are spending the most and if you really need all that you have? We can lower these expenses by lowering your "allowance" in each category.
For example, if i spend 500EUR a month for food, there is probably a way to cut back and start a savings here.
The easy way: Make a budget plan for the next month.
Make the plan with all your planned expenses in each category. You will do as follows:
If you spend 500 so far for food, give yourself a 300 allowance for the next month. Do this in all categories you can. Not in all, but say 2-3 of them. Just keep writing down what you use the next month and go through it again at the end of the month.
Make the budget plan realistically. If you have been using 1000EUR a month for clothes so far, you wont be able to cut down to 200EUR immediately - most likely. Start with an easy task, lets say 600 for the next month, and see if you can achieve it. So you plan the expenses of the next month like that, "allowing" you a little less in each category. Ok, in some categories it will be nearly impossible to go lower, like "rent or insurances". Exclude them here. In most others though it will be possible: entertainment, leisure, sports, car, cosmetics, food...
Part 3: Make it happen!
You are still here? Great, im very proud of you, you are on the good track. Lowering your expenses takes time to adjust. It is a process you yourself go through. Like a new habit you need to impose. Therefore it is important that you stay patient. There is no GET RICH QUICK scheme. That is only a scam (in case you didnt know that one already). Even if you win the lottery - you will still have to pay income tax on that - and moreover it is most likely NOT going to happen.
Instead: transfer your thoughts to what is going to happen for sure:
If you save 200EUR* a month for the next 20 years, that will make a nice sum for your birthday, won´t it? It will make a nice 48000EUR in 20 years. Woooow! Think of what you are going to by for that!!!???!!
Make a budget for the next month, and keep writing down the expenses and "allow" yourself an amount in each category that is lower the amount you used in the previous months. Then go lower in the following month and even lower in the next month. It will be easy in the beginning, and get harder and harder the longer you go. Remember, only you limit the amount!
This one will take time, i admit it. But remember the rich-quich-scheme... not true... better start acting now, than keep holding on to a fantasy!
I would say it is feasible, depends on what you really want. Do you really need to eat out every day? Do you really need that flat screen or new car? It does not mean that you must stop living, no no! The most important is that you remain persistant and patient! And the best part of this is method: it is very simple and it will simply work "on its own".
Trust the woman who travelled europe on 5 EUR a day :) Read about the hitchhiking adventures I had here if you wish http://1001lifts.blogspot.com/
Was that helpful? Please leave a comment or write me directly. I can give you more tips!
More by this Author
How it feels to grow up in a language minority. Read Tanja Wanderlusts personal report on growing up in Fribourg, Switzerland.
Will that be my transport mode at Uni of Ume?Take a closer look first: I would like to describe how student life is in my example. There are surely different students all around the world but this is my case. First...