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How To Cut Down Your Expenses

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Avatar for JLoberiza
Written by   341
6 months ago

February 9, 2022

 In my previous article (How To Start A Savings Habit), I mentioned that spending is a habit and so is saving. To start a savings habit, we have to save first before spending. Therefore the formula would be: 

Income-Savings= Expenses

 Maybe some of you already have heard or read about this formula. To some, maybe this is something new. However, a common reaction to this concept is, this is easier said than done.

I admit, I thought exactly like that at first. I had difficulty applying such a formula. Until I made some changes in my lifestyle.

 Greetings, my wonderful readers. This is a continuation of my previous articles regarding personal finance. What I will share with you here is another step towards establishing a solid financial foundation. How to cut down your expenses


I am not claiming I am a financial guru. I may have had training as a financial consultant, but I am just still in the application process. Then again, I don't want to wait until I have saved a million pesos (approximately $20,000) before sharing with you this knowledge. This is my way of inviting you to join me in this journey towards establishing a solid financial foundation.

 Spend on the Needs Not Wants

In economics, the most basic problem is scarcity.

Scarcity refers to a basic economics problem—the gap between limited resources and theoretically limitless wants. (Souce: Investopedia )

The problem here lies in our "limitless wants". However, does it mean our needs are limitless as well? I don't think so. 

Here is an example.

When we are hungry, we can satisfy that need by eating. Perhaps a hamburger sandwich from a burger stand worth less than a $1 can satisfy that need. However, there are times, we don't want to buy from any burger stand. We want a juicy quarter-pounder or double burgers like Jolibee's Champ or the double cheeseburger worth PHP 140 or about $3.

Another example is clothing. Everybody needs to wear clothes. But why buy a $20 branded shirt when you can buy a $5 shirt? Take a look at this meme to see what I mean.

Start Your With Everyday Expenses

Let's start with our everyday expenses. I will share with you the little changes that I did. However, I would like to reiterate that I don't smoke and rarely drink alcoholic beverages. Not anymore. I have been sober for more than twenty years now.

For the sake of this discussion though, let's start with those two. In the Philippines, a cigarette now costs about PHP 5 per stick, or a pack of twenty sticks would cost PHP100 or $2. If you smoke a pack a day, you are already burning PHP100 a day. That is worth PHP3,000 a month already.

A small bottle of beer costs around PHP50. Even if you drink only one bottle a day, that's another PHP1,500. For these two vices alone, you are spending at least PHP4,500 a month already.

Soft drinks or Soda. While I was able to stop drinking alcoholic beverages a long time ago. I had a hard time not drinking at least a bottle of coke per day. A few years ago would drink at least two bottles a day. A bottle costs PHP15 these days, which means, I spend PHP 30 a day. or PHP900 a month. This does not include the one-liter bottle that I would occasionally buy for the family during lunch. These days, maybe I spend only PHP300 a month on coke. That is a savings of PHP600 a month already or about $12.

Movies. I love watching movies on the big screen. I used to watch at least one movie per week. Before the pandemic, the ticket for a movie costs about PHP200. Plus a date, that is P800. Make that PHP1000 including the food. I continued my old lifestyle, I will be spending about PHP4,000 a month at movie theaters alone.

Dining in Fast Food and other Restaurant. I love Jolibee's cheeseburgers. If I buy one every other day, which costs PHP50, that means PHP 750 per month. These days, I will treat my kids with burgers from Jollibee on payday only. And I receive my salary once a month only. But I treat them with something else whenever I have extra income.

Clothes. I already mentioned clothing earlier. I no longer buy any expensive brand of jeans, unless they are on sale with at least 90% discount. Same thing with shirts and shoes.

Don't Buy On Credit

Another huge culprit to our finances is when we buy on credit. Credit cards should be used for convenience only not to buy things we can't afford. Here's the rule of the thumb:

"If you can't buy it in cash, you can't afford it"

Get Rid of Temptation

As @JulyAnn commented on my previous post, uninstall Shoppe, or any other online shopping app to remove the temptation.

Stop Upgrading Your Gadgets Frequently

I love the tagline in a Linux distro. I think it was Mint.

"If it still works, why upgrade?"

Same thing with your phone, tablet, or laptop. If it is still working, why upgrade?

Other Things You Can Do Without

Stop your subscription to Netflix (sorry Netflix), or any other streaming services. Not only will you save money, but you will also be spending less time watching and be more productive too.

Action Plan

Before I end this, I will leave you an assignment. List down all your expenses. Determine the ones that you can live without. You will be surprised at how much you can save without them.

In Closing

Think about your savings as a water tank with two pipes. Pipe A is where the water comes in (income), Pipe B is where the water comes out (expenses). If the pipes are of equal size, you won't be able to fill the tank with water. Much more if the Pipe B is much bigger.

To fill the tank with water Pipe B must be smaller than Pipe A. Meaning your expenses must be smaller than your income.

This is what it means to live below your means. 

Thanks for reading.


Lead Image by Steve Buissinne from Pixabay 

Burgers Image by Stoyan Stoyanov from Pixabay 

Credit Cards Image by Circ OD from Pixabay 

Related Posts

How To Start A Savings Habit

How Do You Build A Solid Financial Foundation?

How Does The Rich Accumulate Wealth


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Written by   341
6 months ago
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Sa panahon ngayon need na talaga ng budgeting ang mamahal ng mga bilihin. These would be greatly help.

$ 0.00
6 months ago

Aghhh i hope I can follow all of these kaso sa shopee pa nga lang hirap na ako... Pero all the time nmana nauuna sa akin ungmga needs kesa sa wants.

$ 0.00
6 months ago

I literally just did an article about saving yesterday hehe! Everything written here is true. Money is really hard to find these days, plus the pandemic. I hope people will be more cautious on spending money.

$ 0.00
6 months ago

I'm a fan of online market. Mostly it's cost me 80% of my monthly expenses. Thank you for your outstanding tips

$ 0.01
6 months ago

Thank you po sa pa special mention. 😊

$ 0.01
6 months ago

Your welcome. Ikaw din naman kasi ang nagpaalala sa akin na isang dahilan ng unnecessary expenses ay ang online shopping eh. Kaya dapat lang kitang imention

$ 0.00
6 months ago

I got rid of the cost of proprietary software and antivirus by adopting GNU/Linux, free and open-source software since 1999. One can reduce computer price by using Linux:

$ 0.01
6 months ago

True You can cut down the price by about $100 or more by using Linux. Im planning to use Linux when I buy my next laptop

$ 0.00
6 months ago

Just do it and enjoy open-source software. Adopting GNU/Linux is a very good decision.

$ 0.00
6 months ago