Money TIP 3: Cut unnecessary expenses

Most of us go by:

Savings = Income - Expenses

But if you have been following along the previous articles in this blog, we put forth the idea of paying yourself first. The equation should be changed to:

Expenses = Income - Savings (your own paycheque to yourself)

What the hell???

You may be asking that question right now, how will I be able to do this? You have your car payment to worry about, you have to do groceries, you have to pay utility bills, put gas in your car, and so much more. Ask yourself the question: What do I really need and use?

By cutting unnecessary expenses, I don't mean to say that you walk to work, starve yourself, and live under a bridge. I meant cutting the expenses that are absolutely unnecessary. Make a list of all the expenses you have and figure out the expenses that are absolutely necessary, such as rent/mortgage payments, transport fares/gasoline, groceries, etc.

Try to figure out the expenses you absolutely don't need. Do you really need to go to Starbuck's(TM) everyday and buy a coffee for $4 or $5? Do you really need to eat out for dinner everyday and spend over $10? Think over your list of expenses and find out what you could cut. It's amazing how easy it is to limit your expenses by these means.

5 Quick tips

1. Curb out-of-home dining expenses. Instead, buy the ingredients at the local grocery store and prepare the meals yourself.
2. Save energy! Saving energy not only helps reduce overall demand on natural resources, it also helps save the environment. Replace incandescent bulbs with fluorescent ones, make sure that your home is sealed for maximum heating/cooling efficiency, and turn off the water tap when not in use.
3. Evaluate your mode of transportation. Do you really need to pay $600 a month on that huge gas-guzzling SUV in your garage? What else do you do with it aside from drive to work? Consider trading it in for a smaller vehicle with low or no monthly payments to save on expenses, as well as conserving fossil fuels.
4. Don't carry loose change! Use your debit/credit cards responsibly instead of carrying cash, and you will notice a big difference with the temptation to use change to buy stuff from vending machines and other stores.
5. Reduce your trips to shopping malls. Shopping malls are temptation heaven. So if you are the type that loves to go shopping for stuff you don't eventually use, steer clear from temptation, steer clear from shopping malls!