How to cut unnecessary expenses

One of the steps to avoid debt is to cut unnecessary expenses. Why should you do that if you are not in debt? Because if you do spend money on unnecessary things there will certainly come a time when you will have no money and this expenses would have turned into habits.

And to finance these habits you will borrow money. And that is how the debt circle begins, that is how things start. And what defines unnecessary expenses? Is it the latte you drink on your way to work? Is it the dinner you have out three times a week?

Well I won’t tell you what is unnecessary and what not. I can live without coffee in the morning. But maybe you can’t. What I can tell you is that you must see the whole picture of your income and decide to take a small bit, let’s say 3 percent. If your monthly income is $1500 then 3% is 45 bucks.

So the first target for the first month is to save $45 and that is 1,5$ dollars a day. Saving is a habit just like spending. This is one way to adopt this valuable habit. What time do you leave home in the morning? Set an alarm at this time on your cell phone or even better put a memo on your front door. Before leaving take 1,5$ out of your pocket and leave it on the kitchen table. If you do not have change, leave the next bigger note you can.

Repeating this process for 30 days will finally turn it into habit. It does not matter what expense you cut. Your monthly expense budget is now reduced by 45 bucks.

Soon we will be talking on how we can work and build on this.