We said sacrifices have to be made and so, here we are. To keep track of our income and expenses, a budget is mandatory. This stern tool will vividly open your eyes to your monetary reality. It’ll draw your attention to your ways of spending forcing you to answer tough questions. For instance, are you spending more than you’re making? The budget is like a thump on the head. It’s tough love, people. Your aim is to live within your financial means.
Use a ledger or a spreadsheet and enter each and every expense into the database. That includes the Starbucks coffee as well. You’ll be introduced to this thing known as your spending pattern and, that’s where angst begins. There are things that will have to go. Categorize your expenses into fixed, essential and non essential. Fixed expenses are those that remain unchanged month after month. They’re the rent, loan repayments or mortgage. Essentials, on the other hand, are those that you need but whose cost fluctuates. It’s food, transport and utilities. Non essentials are what you can do without. Stop grimacing. These are the ones we’ll slice off. You can do without the regular movie, night out with friends, fine dining etc. Sacrifice these in order to increase your savings rate.
You could also reduce reliance on vehicles. Perhaps move to an area that’s nearer to work. Get some exercise and walk or ride your bike to the office. Maybe take advantage of public transport. The idea is to spare as much cash as you possibly can. Remember, you want to attain financial freedom quickly so whatever you can sacrifice is for the greater good.
As usual, if you have any questions, Ask the Fellow!