How To Minimize Your Expenses And Save More Money

Saving is the income of future

Coming from a lower middle-class family made me realize the importance of money at a young age. Growing up, I watched my father analyzing his expenses month after month to save every penny. This early experience inculcated the habit of saving.

I used to save 10–15% of my pocket money, and buy clothes and chocolates for myself. Saving money not only helps you grow financially but also builds a strong character. The habit of saving gives you the opportunity and self-confidence to increase your earning capacity.

However, saving money as a child and as an adult is completely different. As an adult managing money is a skill and I believe everyone should learn it. I have been trying a couple of methods for 2 years. I have failed some times and succeeded some time but the important thing is to keep trying.

I am sharing the tried and tested method to minimize your expenses and save more.

1. Minimize the use of credit card

In today’s world, we can buy everything on credit. Just swipe a card and pay later. However, this habit is harmful and devoid us of saving money. First of all, when you are using a credit card, you don’t care how much you are spending since you don’t need to pay the money right away.

Second, sometimes even if you don’t have money, you try to buy things and think you will pay later once you get the money. This process builds the habit of spending more than your earning capacity and you always remain in debt.

To break this cycle, don’t use credit cards everywhere. Although, you get discounts for using the credit card, this discount allows us to buy unnecessary things. I once bought a coffee table because I was getting a 5% discount on my credit card. I don’t even use that coffee table now.

Don’t fall into the trap of ‘buy now and pay later’. Think twice before purchasing anything.

You can try the following things to avoid excessive usage of a credit card.

(i) Don’t use more than one credit card. I have one credit card and I use it everywhere.

(ii) Make sure your credit card limit is less than your monthly income. In this way, even if you are maximizing your credit card, you are well within your limits.

Every penny that you save will move you closer to financial independence.

2. Track your expenses

Tracking how you are spending your money is probably the best way to minimize your expenses. This allows you to see where you are wasting your money and cut out those unnecessary expenses.

Follow these rules to track your expenses:

(i) At the end of the day, write how you spent your money if any. I use an excel sheet and write my expenses daily.

(ii) On a weekly and monthly basis, see what things you can cut off. For example, buying coffee or soda every day is not important. Just by cutting these 2 things you can save at least 100$ a month.

This is a powerful technique that can save you a lot of money.

3. Pay yourself first

I can’t stress this point enough. First of all, everyone should have a savings account. After getting your paycheck, you should pay yourself first no matter what. Generally, you should pay 10% of your income to yourself before spending your income on anything.

I would encourage you to pay at least 20% of your income. If you save money, it grows very fast. You can test this formula.

This rule can be applied by having two different saving account. I got this idea from one of my friends. One account should be related to your work where your salary gets credited. The second account should be personal. As soon as you receive your paycheck, transfer 20% of that to your personal account.

I have applied this formula and I have been able to save more than 10,000$ in the last 2 years as a Ph.D. student which is quite good.

4. Don’t buy thing out of your league

This is probably the most important reason why people struggle to save money. This happens because people want to please their friends and relatives. They want to look superior to others. In the process, they don’t realize that they are digging the hole for themselves.

Remember, nobody is going to be impressed by your luxuries. I once made a mistake and bought an expensive jacket to impress my friends even though I already had 2 jackets. Impressing others by showing off costly items is not worth it.

If you want to impress others, impress them with your kindness.

In Conclusion

Saving money is hard but by careful monitoring, it can be achieved. Apply these 4 methods to move closer to financial independence:

1. Have only one credit card and keep the limit well below your monthly income.
2. Track how you are spending your money and avoid unnecessary expenses.
3. Pay at least 20% of your income to yourself.
4. Don’t buy costly things to impress others.

Saving money builds self-confidence, persistence, willpower, and a strong character.

There is no real freedom without financial independence.