Reducing living cost can be very difficult during the best of times. These turbulent economic conditions are far from the best. However, survival depends on ability to cut costs to the bone. Improving ability to cut costs to a great extent depend on budgeting skills.
If you can predict what your expenses will be for a year then the ability to control those expenses also increases.
Maintain a file and keep a log of all expenses – its best if you can able to categorise expenses and have them entered in a spreadsheet for each month. Knowing what your expenses are is a first step toward contracting a doable budget that will help you reign in expenses.
Variable expenses V Fixed expenses
Some expenses tend to vary over time whereas other expenses are fixed such as rent, heating and lighting, rates etc Variable expenses such as groceries and clothing can to an extent be controlled by switching to cheaper suppliers buying generic etc But reducing fixed costs takes a lot more effort such as switching to a more economical part of town or shifting out of town. Controlling variable expenses is all about experimenting to see what works – over a period you will become more proficient at discovering unique ways of reducing costs.
Lowering fixed expenses is an art form at requires much more discipline. For example reduce your mortgage by selling your house and moving to a rental can save a large amount of money. Also as a tenant your household maintenance expenses will also fall.
Bargain with yourself
Look at each and every item on your budget and assess if they are wants or needs – cut anything that is not absolutely essential – this is called zero based budgeting – and will give you a good idea of what can be achieved by budgeting if its a serious process. The downside to zero based budgeting is that it is a time consuming process.
Recycle and re-use
This works for the environment and also helps maintain a tight budget. Look at the small things first – do you print on both sides of the paper, print in draft mode, re-use envelopes, bottles, bags, newspapers, old text books, exercise books, one-side printed paper, old notebooks etc These are small things but they all add up.
DIY rather than outsource
Is a quick way to save a bundle plus you will be learning a useful skill. Plumbing, cooking, remodelling, interior decor, landscaping, cleaning, laundry etc are all things that can be learnt and you can have fun doing it.
Build a team
Get your family and friends to buy in to your plan and help budget expenses and help achieve expense goals. They may be able to help with even more innovative ideas about how you can cut costs. Don’t be afraid to ask them for help.
For more tips of personal budgeting