Budgeting and managing your money does not have to be complicated. The simpler you keep it, the better the chances you have of you maintaining it successfully. Sometimes we think that we are doing just fine and that we have our finances under control but that can be the furthest from the truth.
In some cases the issue is determining where to begin. Well, a good place to start is what’s referred to as the “low hanging fruit” In other words, tackle those areas that are very obvious that you need to either reduce spending on them or eliminate them all together.
Let’s explore a few of those areas that we routinely spend on without giving them a second thought:
- Morning Coffee
- Breakfast, lunches and take-out dinners.
- Cigarettes
- Movies
- Memberships (gyms, online entertainment etc.)
With a simple spreadsheet, begin listing each of these line items. We will then add columns for the dollar value per unit, quantity and total daily. (weekly, monthly, annually will follow) To add the shock factor, list an estimate before you begin plotting actual numbers and see how close you come to the real total.
Once you get a clear picture of what you are actually spending, you are better able to make decisions about finances. Quite often, we place convenience over savings. As always, there is the factor of opportunity costs. Well, if I can pay for getting my food outside, then why not? I can sleep an extra 10 minutes rather than getting up earlier to pack my own lunch or make my own coffee.
Now once you see the results from adding up the numbers, you may be willing to adjust the morning alarm to pack that lunch or brew your coffee at home. Consider purchasing a travel mug that will keep your beverage hot or cold, depending on your preference, and keep that $5.00 a pop in your pocket.
I know most of us think that the lunch kit should be put away after grade school. After all, who wants to carry around extra baggage to work. Get creative and take advantage of some of the cool totes and travel-ready containers designed to make packing your lunch a breeze. Again, think about the cost-savings behind it. Of course, there will be days where it is just more convenient to grab lunch outside but consider cutting down on doing so everyday.
You can do this analysis also for other areas of non-essential daily spending. Take the gym memberships for example and ask yourself the hard questions. Are you getting as much utility from it, or are you attending frequently enough to pay that monthly fee? The same with subscriptions to magazines or Netflix and other online services. Do a real evaluation of how often you use the service and whether or not that money can be better spent or saved.
For each person, these line items may be different. Perhaps, you are already cutting back on some of the items mentioned; however, there may be some other areas where you are able to adjust. It is not always how much you make but more about what you do with it. A little can go a very long way and it does not have to be burdensome. Treat yourself and take that vacation you so deserve. Remember, opportunity costs can be positive. A couple weeks of bag lunches or homemade coffee may pay for that airline ticket.
For more ideas and budgeting tips, please reach out to me. I would love to share my personal budgeting stories with you as well as some of what I have been able to accomplish with very little. These cost-cutting measures can be applied both in your personal finances as well as in your business. There is nothing more rewarding than being able to achieve your goals of financial freedom. Commit to making a plan and stick to it.
For assistance, reach out to us today. Visit our website @https://slsaccountingsvcs.com