Most people who grew up middle class know the value of cutting spending. In fact, when you’re starting out in either business or with your personal finances, the only way to move up financially is to take control of spending.
Because of this fact, I want to cover three of the simplest ways I have cut spending in my personal life and ways you can implement these techniques in your own life.
This by far is the most direct way to begin controlling your spending. As soon as you have a clear vision and are able to align your purchases with your values, your financial journey becomes a lot clearer.
It takes about 20 minutes or less. Take a sheet of paper or a document on your computer. Write out the major categories: taxes, necessary expenses(food, shelter, transportation, insurance), optional expenses/fun (toys, sports cars, Netflix subscription, tv, hobbies etc…), and giving. Now you have the list of types of expenses, begin prioritizing areas or particular expenses that you value more than others. For example, would you rather have a Netflix subscription or put that extra money towards a long-term objective like retirement?
After prioritizing expenses and seeing where you want to be with your spending, you can see where you actually are. This is a major step in establishing and contemplating where you currently are.
Making a Shopping List
After deciding your priorities, tracking your past spending, and setting your trajectory, the last and final step is to make specific spending lists, also called shopping lists. “Why would I write stuff down,” you might ask, “when I know exactly what I want?” The reason for this is because making a list can limit your spending to only things on the list.
An example of this is once I was shopping to buy things for college and as soon as I got to the store I began buying things I thought I needed. The truth was there were a few things on the list that I actually didn’t need. It taught me a lesson: going in with a list is a positive step towards controlling spending.
Ultimately spending money and controlling your expenses doesn’t have to be a boring exercise. In fact, in time as your budget and income expand, you should be able to have a little fun with your spending.