Even when you set yourself a proper budget, it’s easy to get carried away when you’re faced with temptation, such as a fun night out with friends or a wholesome lunch with your family.
There are, nonetheless, ways to reduce your spending each month. We look at why it’s easy to get carried away with your money, and we consider how you can reel this in.
Reasons for consumption
We need to consume products and services to satisfy our needs. But once this is done, we often get distracted by our wants. However, this is not always ideal.
Thomas Brennan, CEO of Franc, points out that the less you spend, the more you’ll have to invest. And the more you invest, the wealthier you can become, and the bigger your dreams can grow.
“We all consume. However, being very conscious about what you need, versus what you want is important. If you really think about it, all you need is food and shelter for yourself and your family. Everything else can be worked around one way or another,” says Brennan.
He points out three dominant reasons for consumption:
- Status – Clothes and fancy cars
- Pleasure – Entertainment such as Netflix
- Convenience – Think takeaways
“Once you’ve identified your needs versus your wants, think how much status, pleasure, and convenience you would be willing to shave off in exchange for increasing your personal wealth,” says Brennan.
How to reduce your spending
Understanding why you spend outside of your budget is the first step. The second step is to figure out how you can reduce this so that you can rather invest in yourself.
Brennan is a firm believer in growing your personal wealth, and he suggests doing the following in order to have more each month to contribute towards this:
This free app allows you to track your monthly expenses. This acts as a receipt management system as well. It’s so easy; simply take a photo of your receipts and create a new report for each month. At the end of the month, generate the report to see how much you are spending per expense category. You can now track the big-ticket items per expense category. You can then think of ways to remove or replace those big-ticket items with cheaper alternatives.
Go through your bank statements
Check which debit orders are coming off your account every month. If it is non-essential then cut it. Try shopping with your debit card and not your credit card or store cards for a month. You will soon realise which things you can do without when you are conscious of not overspending and going into an overdraft.
Save on electricity bills
Keeping your appliances plugged in can add up very quickly. Statistics show that plugged-in devices can comprise up to 10% of your electricity bill. Switch off all appliances at the plug point to save every month.
Practise Meat Free Monday
Meat costs are always going to be high, so give the environment and your pocket a break every Monday. Try making Monday meatless by using beans, grains, eggs, nuts, and fruits in your meals to save money.
Sell your old stuff
Dig through your closets and cupboards for items you no longer use that may have value, then sell them online. You can then use the money to pay off debt or invest.
For more visit: www.justmoney.co.za