Personal finances, for a lot of people, are considered a headache. Even when managing our accounts properly, it’s possible that every now and then we face financial difficulties because no one is exempt of giving into impulsive purchases.
In fact, a very common mistake when keeping financial plans is to think in terms of what you earn, and not in what you spend; even if it seems a little obvious, the problem is not how little money you make, but the large amounts of money you spend.
This is why we’ll give you some advice that will help you to cut down on unnecessary expenses.
Impulse purchases are all those expenses that come out of personal whims or desires, and that don’t necessarily have a sense of urgency or need. Once we understand this everything becomes clearer, because when the time comes to cut down expenses, we can start with the these ones, as they are the least necessary.
Whether you live alone or at home, you may have experienced cutting discretionary expenses before.
During the 90s having cable TV was a luxury, and a sign of financial stability. Eventually this service changed from being a luxury to a need. The decay of quality TV, and the constant demand from the audience, drove the users to find new alternatives. A lot of us had cable TV because there we found something different, but now, do we really need it? Nowadays only 29% of the Mexican households have this service, according to El Financiero. Maybe you can cut down on it as well.
Mobile data plan
More and more people chose on-demand online video over cable TV, however, it’s not the same to use WiFi than using your mobile data to watch those videos on your daily commute. Today, accessible data plans are easy to find. The ideal is to have one that fits perfectly with your needs. There’s no use on having a $1000 monthly plan if you spend half of your day at home, and the other half at your job using their WiFi. In the end you don’t use the all the data, and end up paying for a service you don’t use.
Who doesn’t like to wake up to a good coffee? The problem is when your coffee costs more than your transportation to school or work. Many like to drink coffee from transnational companies, even when their product is high in price and low in quality (yes, even the unicorn stuff). This is why, even when there’s nothing wrong with consuming in these establishments, it’s better to do it occasionally, because it represents an expense that can have consequences in your monthly balance.
Instead of buying coffee every day, consider investing on a good coffee maker and thermos and make your own coffee at home!
Technology has made our life simple and has helped us in a lot of ways, but there are particular cases where it can damage us. An example would be those famous apps for personal drivers. There is nothing wrong with using these apps to move around the city, what is wrong is overusing it and running out of funds on your credit card. A way to downsize expenses in this particular area is to analyze the situation and to leave your home early so you don’t risk running late when using public transportation. Save your credit for situations when you really need it, is the best you can do, even when using the subway can be suffocating.
We all spend differently
We hope this article serves as a guide to have a better financial planning, and to eliminate unnecessary expenses. It’s not about being completely limited and living in frugality, but about having awareness of what you really need when you are about to make a purchase.
Remember, reducing unnecessary expenses will help you improve your finances in a big way, because with small changes you can make the money you earn last more, and in the mid and long term you’ll find this represents a real improvement in your savings.