How To Cut Down on Your Expenses
June 11
Currentl,y the price of gasoline in the Philippines is around 80 Pesos per liter and diesel is around 75 Pesos per liter. However, the prices are about to increase by up to 4.5 Pesos per liter for diesel and 1.50 Pesos for Gasoline. The sadder part is, that the Department of Energy said that there will be more price increases this month. As we all know, once the prices of fuel go up, the prices of every other commodity will go up as well. This is inflation.
The question is, how do we cope with it?
Hello again, my dear read_cash family. I believe the price increase of fuel is felt worldwide. Primarily, because it was caused by the European Union's ban on oils coming from Russia. And as the prices of fuel continue to increase, the prices of other basic commodities have increased as well. For example, the price of pork in our city was only around 160 Pesos per kilo last year. This year it's around 260 pesos per kilo. Even the prices of vegetables have almost doubled. Thus it is a must that we learn to cut down our expenses and save even a little for the future.
The question is...
How to Cut Down On Your Expenses.
Disclaimer
Before I continue, I would like to emphasize that the content of this article is based on my experience and the various books that I read from various authors. A couple of these authors are Robert Kiyosaki and Bo Sanchez. This article is not financial advice but was written for educational purposes only.
The Law of Demand and Supply
First some theories...
Scarcity is the key player in economics. Meaning, that if the demand is high and the supply is low, there is scarcity. Thus the price of goods will go up. Fuel is one of the most basic commodities that is used worldwide. Russia supplies about 13% of the oil worldwide. Now that is cut off from the world market, 13% of the oil supply worldwide is put on hold. Thus the price increased dramatically.
If you would recall, during the height of the pandemic, the prices of fuel dropped. That is because most of the vehicles were rarely used. Airplanes and passenger ships ceased to operate. Along with huge factoriesacrosss, across the globe momentarily stopped operating. The demand for fuel across the globe dropped. So it follows that the price of oil dropped as well.
This is the law of demand and supply. If the demand is high and the supply is low, the price will go up. On the other hand, if the demand is low and the supply is high, the price will go down.
What Can We Do?
I will keep my suggestions short and simple.
1. Cut off Unnecessary Expenses.
The first things to go are your vices. Cigarettes, alcohol, and other vices are the first to go. (I know this is extremely difficult to stop, especially cigarette smoking.) Let's take a look, at how much you can save in a month if you normally smoke at least 10 sticks of cigarettes a day. In the Philippines one stick now costs at least 5 Pesos. Assuming you are smoking the thelesser-known brands. That's a total of 50 pesos a day. In thirty days that's already 1,500 Pesos (around US$30). In a year, that's 18,000 Pesos.
2. Satisfy Your Needs Not Your Wants.
Sadly, a lot of people cannot distinguish clearly the difference between needs and wants. Let me explain this by giving some examples.
When we are hungry, we need food. Let's say are in an office and usually buy your lunch. You have a choice between a karenderya (a low-cost restaurant common in the Philippines) and a fast-food restaurant. In a Karenderya, you can probably buy one viand for 60 Pesos plus a cup of rice for 15 Pesos. That means you will have a full meal for 75 pesos only. (Prices differ in different areas). Or you go for Jolibee's Supermeal which costs 150 Pesos per meal
Now, both options can satisfy your hunger... your NEED to eat food. But eating in a fast-food restaurant or a more expensive restaurant is a WANT.
Same thing with clothes. Why spend 5,000 Pesos for a pair of shoes when you can have a comfortable pair for 1, 000 Pesos or less? I got a comfortable pair of walking shoes from Shopee for only 350 Pesos.
Let's have a little exercise. Think how you can save unsatisfying the following needs. Then do the math and calculate how much you can save in a month and a year.
thirst
transportation
electricity
communication
entertainment
The key here is to stick to the basics. I know that you will be sacrificing some comfort and pleasure once you go back to the basics.
These are just the general ideas on how to cut down on your expenses. Spend some time and think of what other things you can do to cut down your expenses. This might include reducing your screen time.
In Closing.
I believe the world is still in crisis today. We are barely coping with the effects of the pandemic, now with the prices going up, we need to do something. Here's the thing, once our consumption of goods is reduced, the demand will reduce as well, thus chances are the prices will go down as well.
Let's do our part. I would also welcome your suggestions below.
Thanks For Reading.
References:
Yes this is true. My husband tried to walk in going to work instead of riding in a tricycle to save in the fuel.. If people won't buy a lot of fuel and will walk or ride a bicycle, the gasoline demand will be low.