How to Eliminate Unessential Expenses

So often, people are frustrated with staying afloat financially because they don’t know where their money is going. Sometimes it’s easy to forget the little unessential expenses we make on a regular basis, because it becomes a habit to do so. To save more money, here are the steps you should take in finding and eliminating those unessential expenses in your life.

Difficulty: Moderately Easy

Instructions

Things You'll Need:

• Pen and paper

1. The first thing you need to do is gather any recent receipts you may have in your home or in your car. Take a good look at what you buy on a day to day basis. Question if these expenses you are making are essential or unessential. If you have piles of receipts in your car from going to the local coffee shop every morning, you may be surprised to see how much you spend on this one item annually!

2. Once you’ve gathered the receipts, list each unessential expense on paper and how much you spend on them each month. For example, if you buy coffee or a cinnamon roll once or twice a week, that would count as a daily expenditure. By contrast, getting gas for your car every week to go to work is not an unessential expense in most instances unless you plan on walking!

3. After you’ve listed the monthly totals you spend on each unessential expense, multiply that by twelve to get your annual total. This is how much you spend on just one unessential expense in your life, so now is the time to truly weigh the pros and cons of buying that particular item or service. Is it worth using that much money for a simple pleasure? Maybe it is worth it, but then again maybe it is not! Next, take your annual salary after taxes and subtract the annual totals from each unessential expense. Given your salary after these expenditures, can you really afford to be spending on these luxuries? If so, then you may not care to spend less to save more. On the other hand, the extra money you could save by not spending on these things could be very beneficial to your financial future.

4. Finally, decide whether these unessential expenses will continue next month. For those that do not, make a review of your monthly budget and assess how much you are saving on each unessential expense you give up. Then, multiply that number by twelve. This is how much you save each year on each individual item or service you reduce or remove completely. Make sure to use this extra money in a smart way: if you are conservative invest it in an index fund, or if you are more of a risk taker do some research and put it in stocks.

[hradcliffe]

on 9/18/2009 Thanks good article. 5* and rec.

[moonsun55]

on 9/8/2009 Great article, thanks for sharing How to Eliminate Unessential Expenses