“Cut back on your expenses,” is the most common phrase we all hear seeking advice on how to be on top of our finances – but this important piece of advice often falls on deaf ears. “Cutting down on your expenses is one of the most important areas of your finances to focus on if you are keen on learning about money management,” said John Price, the financial advisor of LoansEvents. The term may conjure up images of spreadsheets, complicated mathematical calculations, and a financial course, but money management is not.
A careful perusal of your budget will throw light on many areas where you can whittle down. Some of the changes may seem harder than others, but soon, you will take them in your stride. Here are the simplest methods to slash your expenses and free up your money for other important goals.
Prepare your meals
There is no way around it – eating at restaurants and getting takeaways can eat up to 20% of your annual income. Food delivery apps will quickly eat away at your monthly budget. You should dine out sparingly to keep your expenses under control.
- Bring your lunch rather than buy food at work.
- Living a busy lifestyle? Cook many dishes at weekends and put them in a fridge. You can reheat them as and when you get hungry.
- Home-cooked meals are healthier than restaurant food.
Bring beverages from home
Bottled water and a cup of coffee do not seem to be expensive, but they quickly add up to £20 per week. If you love cappuccino or latte from a cafe, you can order that once a week, but make sure you bring it from home the rest days. It is advisable to drink a cup of coffee before taking off to the office. The evening coffee, if it is not possible to bring from home, can be replaced by coconut water or fruit juice – healthier beverages.
Shop with a grocery list
Having a shopping list will help you stick to items on the list. Look up items in the fridge and cellars to ensure you have not added anything on the list you do not need. Buy groceries in sufficient quantity that can last for a week. You will be able to stay more organized by buying it weekly rather than daily.
Do not be tempted to buy additional stuff you do not need even if it is available on hefty discounts. Going off-list is not a bad idea, but you should not be tempted to buy anything you do not need. Carefully compare the deals to choose an affordable way.
Check for sales
In addition to making a shopping list, you can save money on your grocery purchases by taking advantage of discounts and special offers.
However, do not attempt to buy anything you do not need because it means you are blocking your money rather than saving it.
- Buy items with a higher shelf life in bulk. A bulk purchase will help save you a lot of money.
- Buy fresh seasonal fruits. They cost less than imported and off-seasoned fruits.
- Buy generic groceries. The brand name is not an acknowledgment of quality. The basic processing and manufacturing method cannot be changed, no matter under which brand name the product is being sold.
Identify between needs, wants, and unnecessary purchases
Give it a second thought while spending money on a particular item. Ask yourself if it is a necessity or simply a frivolous purchase. For instance, if your laptop is out of order and you use it for work, you will certainly have to buy it. In the event of a lack of budget, there is nothing wrong with applying for a no-credit check loan from a lender in the UK to buy it.
The scenario is completely the opposite if you use the laptop for your entertainment. Funding your laptop purchase with a loan is a bad idea, then. It will cost you a lot more money than the original cost because of interest payments. You should wait until you create a budget for it. Consider if your money could be better spent elsewhere.
Sometimes, the expenses you make should be categorized as either wants or needs. For instance, buying a pair of shoes when you already have a few in your house is an unnecessary purchase.
Use cash for almost all your transactions
Cards are more convenient than cash to use to buy stuff, but cash helps you closely look at your expenses. You will be more aware of how much you have already spent and how much you have left. Shopping with cash helps you stick to your budget.
The use of a credit card for all your transactions can throw you into debt. You might end up spending more than you can afford to pay on your credit card bills. You do not need to stop using your credit card, however, completely.
- Make sure you do not use more than 25% of your credit card limit at a time.
- Set aside the sum of money as soon as your credit card bill is generated so you can settle the balance within the grace period.
Cut unnecessary subscriptions
Cutting your cable TV is a good way to start if you are using streaming services. Get rid of your landline phone as you can manage all your calls through your mobile phone. Pay heed to other subscriptions such as gym memberships, food delivery services, magazine subscriptions, and gym subscriptions. Subscriptions are often charged to your card, so check your bank statement to ensure you have included all of them.
The final word
You can manage your money more efficiently by balancing out between your income and expenses. You do not need to remove discretionary expenses completely, but there must be the right balance between essential and inessential spending to hold your end up. You can grow your savings and avoid relying on loans by controlling your expenses.
