If you remember, all this week I am posting steps that you can take right now, today, to start yourself on the right path. It’s easy to get intimidated thinking about big investments and thinking that you’ll never get there – but by starting small and starting TODAY, you will be surprised at how much you can accomplish in a short time.
My last post talked about Deciding your Endgame. Today’s post is about Step #2: Reducing your Expenses.
The perfect game plan is a mix of offense and defense – and reducing your expenses is a defensive strategy. I’m not talking about living like a pauper or cutting the joy out of your life – I’m just talking about not spending money if you don’t have to. Maybe by looking closely at your bills and habits you mind find ways to trim the fat and invest what you save.
Start by getting all of your major expenses together. I’m talking about car insurance, home insurance, consumer debt, gas credit card, grocery bills – the whole works. Then with each bill, ask yourself honestly: is there any way for me to reduce this expense?
For example, I recently reduced my annual insurance payment by getting policies with one single provider. Can you do the same?
Or can you save on travel expenses by carpooling, using public transport, or riding a bike? Can you shop a different grocery store? Can you eat fruit in season and buy local?
If you want to take this a little further, make a simple Excel spreadsheet with three columns labeled: “Before”, “After”, and “Savings”. In the first column, write down your current expenses. In the second one, write down what they could be after you make a few adjustments. Even if the adjustment seems small, write it down. Write down the amount saved on each expense in the “Savings” column.
Then add up all of the savings. How much is it? $50 per month? $100 per month? More? Are you surprised? And here’s the most important part – don’t use those savings to buy an expensive toy that will add another expense. Use it to make an investment.
This step is something that you can do today, and you might be surprised at how much money you can free up.