written by KCLau @ KCLau’s Money Tips
Cash flow chart involves simple mathematic calculation: Saving = Income – Expenses. Savings is the priority since it appears first in the equation. To increase saving, we can either increase income, reduce expenses, or doing both at the same time. Which option requires your most attention?
Focus on Reducing Expenses
If your main focus is on cutting down your expenses, it is all about frugality. I found that many of the personal finance blogs preach about how important it is to live frugally. Is it worth your effort? When you don’t know how to increase your income, cutting down expenses is the easiest route to increase your net worth.
50 things you can do to reduce expenses
- eliminate cell phone
- cancel newspapers, magazine and other periodicals subscriptions.
- use energy efficient lamps
- purchase generic prescriptions when possible
- buy in bulk when shopping for grocery
- terminate your gym membership
- read books at library instead of going for movie
- cut your vacation
- stay at home whenever possible
- stick to your budget
- cancel your TV subscription
- use email instead of phone whenever possible
- compare before you make any purchase
- plan menus for the week before you shop grocery
- prepare shopping list to avoid impulse buying
- go to the store just once a week
- do not go to restaurant when you are hungry
- plan the use of leftover food
- buy clothing at the end of the season
- shop at discount stores
- buy used item whenever possible
- use public transportation, if available
- have good health habits
- avoid smoking
- avoid drinking alcohol.
- play board and card games, they are cheaper
- attend concert only if it is free
- make your own home accessories
- consider less expensive housing
- Pack school and work lunches
- review insurance coverage. Are you over insured?
- reduce trips outside the home
- use 10% less than usual
- stop shopping… not even window shopping
- change to cheaper brands
- look for discount coupon
- buy only when you are offered rebates
- drink plain water only whenever you dine out.
- don’t keep more than ten bugs in your wallet
- cut all your credit card except one
- do your own car maintenance such as changing oil
- stop going to a hairstylist
- rides bike instead of car
- avoid silly bank fees
- don’t buy a car
- just rent a small room to stay
- share room and split the rent
- stay with your parents
- start blogging and it will cut all your other entertainment
- ask for discount every time before you pay for something
Hard work and no fun!
Wow !!! There is a lot of hard work. But do you really have fun doing all those frugal things? I can only agree with item no.49, which had saved me a lot of money.
How much can you save? It is limited.
No matter how hard you try, you can only cut down your current expenses completely. Most people will celebrate if they can cut 10%. 30% is already too much for most people to compromise their lifestyle. Crux of the matter is, by concentrating on reducing expense, what you get is hard work, no fun, and only be able to save as much as the amount you didn’t spend.
Focus on Increasing Income
If you change your focus to increase your income instead of reducing your current expenses, you will see a whole new world of opportunity.
25 things you can do to increase incomes
- invest in stocks
- invest in real estate
- increase your knowledge
- sell items you no longer need
- get a part-time job
- rent out spare room
- join MLM
- start a business
- learn how to sell
- make money online
- get a raise or a second job
- change your thinking
- raise your rates
- get extra work
- get money from public aid or charities, if you are qualified
- go back to school to acquire additional skills
- buy an established small business
- arrange a better feng shui at your home and your work place
- start a make money online blog
- invest in mutual funds
- take your company public
- pay less tax
- learn forex trading
- invest in ETF
- get sponsorship from family members, if you dare.
Tough job but a lot of fun!
How much can you probably earn and save? It is unlimited!
Sky is the limit.
Are you a great saver or an income pursuer?!
So, how much time do you spend in a day to increase your income? 8 hours? 12 hours?
Is it viable to cut down the effort to live more frugal? And spend the time saved to actually work out some plans to increase your income?
I am definitely an income pursuer. How about you?