People resolve to increase savings and cutting down on expenses is the first logical step to do that. But the problem is most people don’t know where to start. They feel guilty of every money spent and may end up abstaining some wishes or even some necessity. Read on for some food for thought to see what steps can be taken to cut down on expenses
First and foremost the most important thing to do is to start maintaining your budget. Nothing can give you more clarity and accuracy as to how your money is being spent. Some people do it a traditional way of maintaining it on paper or an excel sheet. There are also loads of apps which can help you do this. Lot of these apps pulls data from your bank login or even text messages sent by bank to you, reducing the manual work considerably.
Secondly the most logical step is to group your expenses according to the nature of the expense. Here are the four grouping structure
Grouping the expenses in the above mentioned categories helps you determine where to start. It’s very easy and desirable to start cutting expenses from the last category. After categorisation you can also compare which grid you are spending the most. There is no thumb rule as to what should be the ideal spread but if you are looking to cut down expense you should be spending the least in the fourth category.
Please write back with your comments and feedback