It is a known fact that the majority of a person’s income, if not all, goes to just the expenses every single month. The ideal 50 20 30 rule, which is the model method of partitioning your income every month, is almost never followed anymore. With the 50 20 30 budget rule, 50% of the income would go to living expenses and necessities; 20% would go to debt payment and savings; 30% would go to luxury items. Unfortunately, due to the increasing prices and the difficult economy, everyone is dealing with, it is becoming extremely difficult to follow through with such an idea.
In the United States alone, a wide disparity between income classes can be viewed. While the majority are middle-income earners, only a third of the population breaches 6 digit figures. A lot of the amount earned through salary and compensation gets dispersed to pay for debt expense. Only around 40% of the post-tax income goes to living expenses. More than half of the income goes to paying off student loans and mortgages. Through this method, more debt is incurred by average persons. Average people go into debt trying to pay for the debt.
What are some of the best methods you can do to reduce the cost of living?
Unnecessary spending can be trimmed down by making an active list of what you are spending on. A listing sheet containing the cash flow of your overall wealth is essential in gathering information on what to trim down. Discipline starts with making your own list. Every month, you earn a set amount of money for you to spend. Tracking down your expenses to the littlest details will give you an overview of which areas you spend most on. It is hard to realize what takes the biggest chunk out of your salary if you do not account for it physically. You can also use a budgeting app to track your expenses down.
Making Home Cooked Meals
To cut down on costs, consider eating home-cooked meals instead of eating outside. A portion of the expenses you spend is merely off the profit restaurants make from what you ordered. Cooking home-cooked meals are not only fun, but it can also be cheap. Control your spending by maximizing everything that you buy from the grocery. Home-cooked meals are healthier in comparison to fast food choices. Cooking at home can cost up to 75% less than buying food from the outside. Food waste, service fee, delivery fee, and the courtesy tip are immediately cut off from the expenses if you choose to cook at home.
No Luxuries, Only Necessities (But Be Kind To Yourself)
Consider spending only on necessities rather than allocating a portion of your income for luxuries. Luxuries are excesses that you really do not need. Necessities, on the other hand, are products and services that are essential for your survival. Spending only on necessities will significantly decrease the expenses you incur. However, it is important to remember to also be kind to yourself when buying what you want. If it is a want that is vital to the improvement of your quality of life, then it has already turned into a need. Always only buy what you need, not what you merely want.
Downscaling from your current lifestyle is something you should consider if you are having a hard time paying off the bills. Maintaining the upkeep of a large house can become costly in the long run if you do not have the proper income to support it. Call up your real estate investment company and consider finding a smaller investment opportunity or relocation home to downscale your way of life. You can easily cut a large portion of the debt expense that eats up most of your compensation income.
Selling Unused Items
Selling your unused household items to augment your payment for expenses is a great way to reduce your monthly cost. If you cannot reduce your expenses, maybe you can drive the income that you make. Unused items within your home that do not provide any kind of sentimental or real value to you can be disposed of easily. It will also declog and declutter your home.
Cutting the Cord
Consider cutting the premium subscriptions you have. While there is a fear of missing out on the latest movie or latest television series, you must always remember that you only have a limited amount of time to be productive in a day. In the long run, none of these entertainment sources matter. They are merely a distraction and an added expense that can burden you. Cutting the subscriptions off your credit card bill is not only income-saving, but it can also drive you to make the most use out of your time.
Reducing your monthly expenses is not difficult. With a little willpower, you can always drive those numbers down.