Plan 2 Prosper

This post is the fifth of a series of six on budgeting and Cashflow management. While it builds upon the activities that you may have done from previous posts, it is also a stand alone post.

Another way to assess your budget is to focus first on your variable expenses. Analyse one category a month and look for ways to reduce those expenses by just 5-10% or whatever you think you can. Over the years, this will add up to a significant amount, which can be applied towards debt or invested.

Step 1: So this month, pick one variable budget category. For example, let’s choose our grocery budget. Write down what your average monthly spending has been per month for groceries. If it is $500, then write that down.

Step 2:Then you will need to determine what percentage you want to reduce that budget by. If you can reduce it by 10% each month, you would need to find ways to cut $50 a month from your spending. Since that doesn’t sound too unreasonable, let’s use that for our example and continue on.

Step 3: You’ll want to make a list of all the things you can do to reduce your spending in that category so that you will save $50 this month in your grocery budget. Start making a list. It would include such things as: menu planning, shopping for sales, cooking more from scratch, price shopping, eliminating sodas and juice from most meals and drinking water instead, etc. As you can see, there are many ways you can reduce your grocery budget by $50. If you can’t save $50, then reduce your percentage of savings by a more reasonable figure that works for you.

There is no right or wrong here. The important thing is that you do something to reduce your spending, and create additional cash for paying off debts and/or investing.

LET ME ASK YA THIS…
Do you talk about your household budget with your family?

LET ME SUGGEST THIS…
Send me an email (story@plan2prosper.com.au) and share YOUR story of how reducing YOUR variable expenses has meant you could buy that wedding ring, house deposit, car, boat, holiday, extra investment  …..!

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