Financial Freedom - Take control of your expenses

It is very tempting to think that more money will solve all our money troubles. If you are not managing your finances and controlling your expenses presently, more money will simply generate more expenses and more debts.

It is absolutely critical that you learn to control your expenses before you go look for more money. It is easier to build wealth by controlling what you already have, than going out to look for more. For sure your current income will not make you a millionaire sometime soon, but controlling what you have is the place to start. Until you bring your expenses under control, your expenses will always keep a step or two ahead of your income, and your quest for financial freedom will be like a mirage on a desert road.

It involves as a first step, living below your means, saving and eliminating your consumer debts; in that order.

There are no quick fixes. Wish there were. Living below your means is a very tall order indeed, especially after having taken it upon ourselves to help boost the consumer confidence index of the economy for years. You help fuel the engine of economic growth while you come to blows with your spouse in the theatre of family finances, as store owners smile all the way to the bank.

Living Below Your Means

Although it sounds scary, you have to live below your means before you are able to save. That means you have lowered your expenses to a level that you have leftovers; leftovers that you can use to advance your journey to financial freedom.

A good point to start is to itemize your expenses. That paints a picture of your expenditure profile. From here, you know where to start pruning. If you go about it dispassionately, you can slash 40% from your monthly expenditure.

There are books, experts and sites on this subject. Some of these will be featured on this site.


Gulp. If you spend everything you earn, whatever it is you earn, you are still at ground zero. It sounds like "sayings of the wise" from some historical figure or big shot. Actually I said that.

After taxes (you can use a tax calculator to help with this), the next thing that should come out of your income is savings. Depending on your lifestyle, this amount can be further subdivided into many streams viz:
(a) Reserve/emergency
(b) Investment
(c) School fees/children trust fund
(d) Purchases

This is just a guide. The categories and percentage that goes into each depends on individual circumstances. Some experts suggest 40% of your net income should go into your savings portfolio. As usual, as good as it sounds, I believe individuals should work out their "salvation" based on their circumstances. Desperate situations demand desperate measures.

Keeping at this, month after month, year after year takes a big dose of ongoing discipline. Saving is a wide subject and there are books, experts and sites on this subject. Some will be featured on this site.

Eliminate Your Debts

Terminate it (enlist Terminator I & II), assassinate it, torpedo it, blow it away! Seriously speaking, this is one encumbrance you can do comfortably without. How you got into it in the first place, I believe is a story for another day. It is time to get out, as fast as possible without a backward glance.

It is an unnecessary distraction, both mental and financial. Based on your individual circumstance, work out a plan that is acceptable to your creditors. Debt servicing should not jeopardize your savings plan. As among nation states, you don't wipe out your external reserves to service debts.

The most prudent way to go about it is to tackle high interest loans line credit cards first and go down the ladder. Again, there are books, experts and sites on this subject. Some will be featured on this site.

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