Analysis of future goals is essential so that we can workout a judicious balance of current needs/ expenses vis a vis the future needs.
Analysis of cash flow will not only throw a clear picture of our expenditure pattern, it will also provide a clear idea of whether all the presumed income had been earned or is there any difference in our expected income to the actual income.
The basics for cutting costs:
We need to work out a comprehensive account of all the expenses we incur and understand the nature of each and every expenditure. Generally, all the expenses one incurs can be classified into-
- For basic needs - which are necessary.
- Expenses, which are not immediate but may be essential for a future need.
- Absolutely unnecessary expenditure.
The third kind of expenses should be totally prevented and the second one to be rated on the basis of both, the need and for the value of money. For basic needs, we do not have any choice but for any thing else, think before you do. Use your head rather than heart.
The actual actions, which will save costs:
1) Prevent all impulsive purchases
The biggest wasteful purchase pattern is caused by the impulsive purchases, which are not projected and expected. It is also true that a majority of impulsive purchases at a later stage are regretted. In fact, the best advice here is try to prevent any visits to malls or places like that which thrive on making you and me buy what they show rather than what we want.
| Also Read: Shopaholic, Get Back to Normal |
2) Replace credit card with debit card
Credit Card is a wild instrument, which induces one to buy/spend more than what he or she can afford or need. Replacing it with a debit card, which serves the same purpose with only as much money you have to spend as the best option.
| Also Read: Shopping is Safer with Debit Cards |
3) Car expenses
While buying a car, do not buy a car for prestigious reasons but buy only for utility purposes. Remember most of the individuals currently buy a car on a finance scheme. Thus, buying a bigger car leads to continuous outflow of higher EMI (equated monthly installment), which consists of huge additional interest outflow, not to forget the regular higher outflow towards fuel and maintenance costs.
| Also Read: Pay Less for Car Insurance Premium |
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