- Personal Finance
Top 5 Ways to Drastically Reduce Your Expenses
There are 100 ways to save money, and 1000 ways to spend it. Basic stuff like food, clothing, shelter and other things need are a necessity to lead a comfortable life. Such expenses cannot be reduced easily, and reducing them won't be healthy either.
Then there are those others things which buy simply because they caught our curiosity or interest and we couldn't resist the temptation. These are what we can think of as the devil's purchase. Here are some ways I have found helpful in preventing unnecessary purchases.
1. Credit Cards - The Master of All Evil
Credit cards have definitely made our lives easier. We don't need to carry wads of cash and risk the danger of being mugged (if you can ignore ATM crimes). One swipe of the card and your things are paid for by the credit card company, whom you need to pay only at the next billing cycle at no extra charge. They even offer us a "minimum payment due" where you will only need to pay a certain percentage of the due amount, if you cannot make the full payment.
Not only does this practice make us lose track of our expenditure easily, we forget that the whole thing isn't exactly coming for free - remember the annual fees you pay for your credit card.
Remember the times when the credit card companies just upgrade your card with promises of extraordinary discounts at merchant outlets? Not to forget the rewards points for spending an X amount of money at ABC retail outlet.
Finally at the end of the month, you gape at your credit card statement, your jaws dropping at the colossal amount outstanding.
For those of us who can't live without our credit cards, it may be difficult to give it up easily. But trust me, you will see your expenses dip once you stop carrying that evil card in your wallet.
Why not use your debit card instead?
It would ensure that you don't spend beyond your means? It will be much easier to put a check on your purchases when you see actual money get debited from your savings account.
2. The Lure of Big Stores
Imagine that you have a shopping list and you go to the nearby provision store to pick up the items. What do you buy? You buy the items on your list. Of course, once in a while, you may also pick up other items that you see and had forgotten to list.
Now imagine yourself with that same list at a huge departmental store or a mall with its never-ending display of products. You want to buy salad dressing and end up buying 2 or 3 varieties of them, simply because they look attractive. Wait, what is that? A new brand of chocolate that looks so very yummy. Let me check it out.. yum yum!! :)
You have the huge trolley cart with you, so carrying all the 100 items isn't such a bother. Back at home, you are trying to unload everything from the trunk of your car and you realize.. oh my... I can really open a shop my self :)
Remember, huge departmental stores are made exactly for that, they make us buy more than we originally intend, mainly because we are dazzled by hundreds of interesting choices laid out in front of us.
Of course, that doesn't mean that we stop shopping at big stores and start depriving ourselves of what we need. We just need to keep the lure of the display under control and stick to our list of necessities, as much as possible.
It's perfectly fine to indulge our fetishes once in a while, but if you are doing it every single time, maybe it's a cause for alarm.
3. Fabulous Clearance Sales
In earlier days, clearance sales would happen just before major holidays. But now, you have sale throughout the year, not just for summer, winter, fall, independence day, republic day, labour day, etc. So frequent have these sales become that the whole novelty has worn off.
However, attractive advertisements and words like "up to 70-80-90 percent off" tempt us like never before.
Remember that retail chains are not charity organizations. They are just employing business strategies to make customers rush to their shops regardless of upcoming holidays.
While some deals may be truly spectacular, do exercise caution before over-purchasing. Maybe the jacket worth 50 bucks isn't such a steal after all, especially if you have 10 other jackets stacked away in your wardrobe.
Unless you actually need the item, tell yourself that sales keep happening every season, you can always buy it next time if you still long for it.
4. To Buy or Not To Buy
Think of the alternatives whenever possible. If you cannot stop thinking about by that ultra-fashionable Gucci bag you saw at the display the other day, recall how many brand-new bags you already have, and ask yourself how another one will add any value.
Are you losing your sleep over the new iPhone 6 even though you purchased a brand new phone just a few months back? Well, just think about it, do you only want to buy it because it is in rage and all your friends are raving about it, or do you really need to upgrade? Consider the necessity rather than what is in trend.
Tempted by that evening gown that costs a fortune? Think about how often would you really wear it. Unless you are a celebrity or a socialite or in the fashion industry, you really don't need one more evening gown to add to your collection.
5. Note Down Your Expense
Last but not the least, make it a habit to write down your expenses for the month and add it up. You can maintain a notebook or an excel sheet, anything that suites your purpose. Not only will the total figure give you a reality check and help you identify your greatest weaknesses, it will help you understand your spending patterns and where you can save the costs.
Okay, now you will say, if I used my credit card, I wouldn't need to write it down and waste my previous time playing my own accountant :) Well of course, but here is some memory jog, debit card expenses also come in the bank statements, so no worries even if you feel too lazy to write it all down.