How to Control Your Expenses: Strategies for Financial Management | Spring Money

Being financially stable or having decent savings is often considered an outcome only through earning massively, which hypothetically is true, but still doesn't guarantee a successful accomplishment of your goal.

Why am I saying so?

Because, earning well could only allow you the flexibility to save more, but someone with overspending habits will fail to do so. Instead, someone who earns comparatively less, but is disciplined in keeping a track of their expenses could have better savings.

Hence, controlling and managing our expenses is of extreme importance for all of us, irrespective of whatever we earn.

There are many ways to control your expenses in order to save money, and this blog will be sharing the few most effective ones that would be applicable to most.

1. Track Your Earnings and Expenses

To make a start, the best thing to do is to make a basic calculation of what's coming to you, which is your earning, what’s going out, which is your expenditure, and what you are left with, basically, an amount that you are saving. If the leftover amount is too little either you aren't working hard enough to earn more or have no control over your spending habits, that's one reason why you should allocate a fixed portion of your earnings for saving. This, “save first spend later” strategy will naturally control your overspending tradition

Now further, divide your expenses into “Needs” and “Wants”, the below table will help you understand why this is important.

​Needs	Wants
House rent	Eating at restaurants
Grocery	Travel plans
Electricity bill	New mobile/gadgets
Vehicle fuel & maintenance	Cabs for transportation
Others	Shopping for clothes & accessories

It’s not that one can’t cut short expenses from their needs column but it’s the unplanned expanses from the wants that are most important to take into consideration.

Few tips to control your expenses from the wants column:

• Avoid eating out too often. Learning to prepare different cuisines at home, will not only save you money but also your health, and it’s not just a saying, good health will really help in creating wealth in long term.

• Plan your travel events in advance. Searching well on various websites and making advanced bookings of hotels and flight tickets could easily reduce your travel expenditure by around 20%-30%.

• Shopping is very pleasurable for most. Especially when the e-Commerce boom is now a new trend. People keep scrolling and then there’s always some or the other thing that you get attracted to and make a purchase, whether be it the fourth pair of shoes, the sixth watch in your closet, or maybe a yoga mat that you bought just because you got a thought of practising yoga someday. We call it "Impulse buying". To know how often you fall prey to this trend, first, get your bank statement for the last 3 months and calculate how much you are spending on such purchases that aren't adding any sense or usability to your life. The best way to avoid this is to give yourself a week to inspect whether you really require that item or it's just an act of impulse buying. Also making a purchase during festive seasons will offer plenty of discounts and other better deals.

• A lot of people presently get fascinated by expensive mobile phones and eventually make a purchase. A smartphone is definitely a need for us, but spending half a lakh on it may not be required. In most cases, we don't even consider taking our damaged or malfunctioning phones to the repair shop if it's more than a year old and proceed directly to buy a new one.

2. Apply The 50/30/20 Rule

Don’t freak out, we aren't going to implement a difficult mathematical formula here. The 50/30/20 rule is simply a way to manage your money more effectively by dividing it among your needs, wants, and savings, by spending 50% on your needs, 30% on your wants, and saving the rest 20%.

Keep track of your monthly expenditure and make sure it aligns with this rule. Also, it’s not like if someone is earning ₹1 lakh a month then it’s okay to spend up to ₹30 thousand for their wants every month. This 30% is calculated on average, so for instance, if you spend 40% instead of 30% this month, make sure you bring the average back to 30% when calculated year-wise.

3. Stop Surviving on Credit Cards

Every technology comes with a pro and a con, this is similar to the case of Credit cards. A lot of people will ask you to throw away your credit card but in reality, they aren't that bad.

For example, imagine you lost your phone or it got damaged badly, and now you need to buy one but don’t have the funds to do so. In this scenario, you can use your credit card to pay for your mobile phone and once your salary gets credited you can pay back the full amount prior to the billing date, pretty helpful, isn’t it?

However, having a credit card gives you the opportunity to overspend. Like buying a mobile phone worth a lakh and paying the full amount in form of EMI that you would not have purchased due to insufficient funds.

The credit card in both of the above cases has been used for the same purpose which is for buying a mobile phone. But in the first case, it has been used smartly to fulfil needs without taking over advantage of the technology while in the second one, the main agenda was to overspend that got possible due to the existence of credit cards.

4. Avoid Unwanted Loans

Around a decade ago people used to think multiple times before taking a loan, even if it was for major necessities like a house or education. But presently loans are being taken by people, like sliding away a ₹ 100 note from a wallet.

Nowadays, newbies are spending lakhs to buy expensive bikes or cars for themselves at an early age without thinking about the massive interest rates that they’ll be paying in those years. The “YOLO”(you only live once) mentality is making space for such uncertain decisions.

I am not saying that people should stop having aspirations but a sensible and thoughtful approach would make more sense. Saving and investing initially for a short-term goal, which could be a bike or car is definitely a better option that will put control over your expenses.

5. Minimize Utility Cost

Your daily, weekly, monthly, or yearly expenses that cover the basic necessities come under utility costs like electricity bills, fuel for the vehicle, general repair and maintenance costs, and much more. These are those expenses that can not be avoided in most cases but could be lowered in the following ways;

• Switch off all unwanted electrical appliances while stepping out of your place or when not required.

• Controlling your expenses has nothing to do with not spending where required. For instance not getting your vehicle serviced on time to control expenses will result in a mileage drop or could also cause damage to the engine that would cost you massively. Hence don’t cut off expenses that are a must, the outcome could be the opposite of what you imagined.

• Whenever you visit a supermarket for your groceries make a list of items that you need to buy. Going undecided will eventually make you spend more, even twice what was required.

• Whenever you buy any electrical appliance consider the one with the maximum star rating. This rating indicates how electricity-saving friendly this appliance is, more the rating greater the savings. Initially, such appliances might cost a bit extra but in long term, it saves you a decent amount of money.

6. Use Cash for Regular Expenses

Once you know what are your basic expenses like fuel for your vehicle, groceries, and others, you can withdraw the amount in cash through an ATM and keep it with you. Every time you spend an amount, in your mind, you know how much is left and will help you limit your expenses.

Conclusion:

There are numerous other ways that will help you control your expenses but these are the ones that would be applicable to all of us and will give maximum results if implemented correctly. We believe this will help you in cutting down your expenses and grow your saved money to bring you closer to your goals.