After discussing the minimalist rule to follow when preparing your budget, it is important that you take deliberate steps to reduce your monthly expenses. Here are simple tips:
1. It gives you control over your life style:
Life becomes monotonous and boring when you lose control. Everything on the shopping shelve becomes a need and desirable. But setting a rule, not to spend more than 50% of your income on all your needs and another 30% on your wants, gives you the driver’s seat in your life. The next thing after this has been mastered is to periodically work at reducing the amount you spend on each.
2. Unforeseen Expenses:
Working on reducing your monthly expenses frees some cash for an emergency. Say your car needs some major repairs and you need N10,000 to N50,000. What if your house needs repairs or you discover that you are living in a building with leaking roof? You can’t always depend on friends and bank to lend you funds for all of these things. It is much better to anticipate the things cropping up and have some money saved.
3. It frees funds for savings and investment:
The joy you now experience, by purchasing all those fancy stuffs will quickly disappear when you look back at how you have spent all your income from the last 2, 5, or 10 years of work with nothing to show for it. Save yourself the heartache by deliberately taking conscious steps on reducing your monthly expenses and start now put something aside, if ever possible up to 20% of your income.
4. Reduce fear from loss of job:
Most of the irrational decisions and actions exhibited by many in the corporate world are tainted by the fear of losing their jobs. With this fear ever present with many, they end up rationalising fraud in the workplace. You should not be reduced to this vice, for the singular reason that you have nothing to fall back on.
5. Financial Independence:
Even if your desire is not to become wealthy (I doubt if there is anyone with this thinking) it pays to be the one calling the shot, financially speaking, in your personal life. Not your boss, by what you get in your pay cheque. Such as deciding to go on vacation, return to school or launch out in a business venture or pursue your dream in other areas of life.