Ways of reducing unnecessary expenses

    
Good money management techniques will prevent you from running into debt, IFE ADEDAPO writes

Some people are in the habit of flaunting their wealth. This may not be on purpose to some of such people; ‘it’s just the way they are’. But they are others who just love extravagant spending.

There is another group of people who love to imitate those that live extravagantly. People in this group often pay a huge price for this love. Failing to realise that some people can afford to live extravagantly thanks to huge incomes or family inheritance, these imitators realise their mistake too late, when financial ruin stares them in the face, according to experts.

Regardless of your income or taste, financial experts say it is important for you to think twice before spending your money.

Whether you are just starting a business or struggling to grow one, you will have to think twice before dipping your hands into your capital or savings.

Making efforts to check your expenses is important, because experts say some people are not even aware that they have bad spending habits; they feel it is just a normal way of life. You can start the journey towards keeping your spending habit in check and preventing yourself from falling into debt by having a monthly budget.

Here are some useful tips:

Creating a budget

Experts say in order to do this efficiently, note down how you spent your income in a month by listing out each item bought or the services paid for and the reasons for buying them. If you are unable to give an important reason for buying an item, then that item constitutes an extra expense.

Therefore, at the beginning of every month, create a budget that covers your essential needs and adhere strictly to it.

If you are trying to save money to invest in your business, the Director of Prime Ventures, Mrs Ella Azubike says you have to be disciplined and remain focused on giving your business the best it needs by taking the following measures:

Avoid extravagant friends

Azubike says such friends are fun to be with because when you are in a gathering, you get easily noticed, but the adverse impact such friendship will have on your bank balance can be devastating, if care is not taken. Therefore, try as much as possible to keep your distance from such friends especially when it comes to outings that can lead to shopping. You don’t have to totally dissociate yourself from them, but spend little time with them so they don’t influence your budget or let them be aware of the tight budget you are working with.

Carry less cash

Experts say some people always have the urge to spend endlessly whenever they have the opportunity or when they have the cash on them. According to them, you can overcome the urge to spend by keeping just the amount of cash you need to finance your activities for a day in your wallet. Doing this prevents you from spending on reflex. It also forces you to avoid those cash-only convenience stores that sell enticing treats.

Reduce personal expenses

These expenses can range from clothing, cosmetics, entertainment and restaurant expenses. These are usually personal needs that can be managed with the right measures. For instance, instead of constantly eating out, try as much as possible to do your own cooking. Also, packing food for lunch stops you being tempted by expensive sandwich shops and also keeps you from the trips out with friends where money flows out.

Cutting down expenses can mean changing your lifestyle and learning to do certain things yourself, like mowing your lawn, manicure and pedicure, laundry and so on.

Challenge yourself

Make it a challenge to come up with creative nights out or in on a budget. It could be a picnic in the park or a movie night at home. As an alternative measure, if there is something in particular that you want to buy, see how quickly you can raise the funds through extra means.

Get a savings plan

There are several plans being offered by financial institutions that allow you to save on weekly or monthly basis as you wish. Some even deduct your saving directly from your salary account before you start spending it. This kind of plan and other available ones can help to limit your credit balance and curd extravagant spending.

Cut down on variable expenses

Variable expenses according to professionals vary and cannot be allocated a fixed amount. Therefore, there are ways of reducing them by setting a limit on the amount of money expended on them. Such expenses are on transportation, utility bills, electricity bills, phone calls, etc.

Azubike says it is more economical to use one phone rather than paying bills on two to three phones. Likewise, internet bills can just be limited to a single plan on one device and can be shared. For electricity, a prepaid plan can help in minimising cost. People can also reduce electricity cost by making it a habit to switch off all appliances that are not in use.

She says in order to minimise transportation cost, opt for public transport as often as possible; it is cheaper and faster.

Copyright PUNCH.