Track your spending

Carrying on from my previous post... I think the first step in making long-lasting changes in how to deal with money is to first work out what your values are and to adjust your thinking to make sense of it. Generally, when you're living this way, you try to cut your costs, stop unnecessary spending and create your own organised system to pay off debt and lower the cost of living. How you do that is up to you and it can be done well in many different ways. There is no one size fits all formula for this. You look at your own life, your needs, your level of debt and you work out how you'll cut costs while you pay off debt.

The first thing I suggest you do is to track your current spending. We all know how much money we have coming in each week/month, but not all of us know how much we're spending, or on what.  By tracking your spending, you'll know how much you're spending on what you need and also on those things you don't need, but want.  It's good to identify those wants, because they are usually what you can stop buying to save money. Coffee and magazines are generally in the wants category. Spending four dollars a day on a cup of coffee when you're at work five days a week will add up to about one thousand dollars a year.  And that's just one thing. Magazines are another thing that can be easily stopped. Buying lunch at work five days a week, if you spend about seven dollars a day, will cost you around $1750 a year. Even if you spend $750 buying your basic ingredients to make lunch at home, you're saving $1000 a year. If you can get into the habit of taking your lunch and a drink with you when you go to work, it will help you save.

But there is a catch here. You have to be sensible about what you cut back on. If a cup of coffee every day seems to be too much of a sacrifice, buy coffee every second day or twice a week. In three months, think about it again and you might be able to do more. YOU have to decide on what you can live with. It's not for me or anyone else to tell you what you should do. You're taking control of your own life and you call the shots. Just make sure your decisions are sustainable and realistic. Make sure your changes can be done, start off slow if you need to and as you see the changes happening, you may decide to increase what you're cutting back on.

Here's an old post on how to track your spending.

We are all different in so many ways, some of us rent, some work from home, some have a car, some have no children, some have a large family. No formula can cover all the differences.  The one thing we do have in common is that we all need food so if you can save money on your food, then those savings will be ongoing. I don't bother searching for "specials" or clipping coupons. What I see on sale at supermarkets are usually products I would never buy, they tend to be snack foods, soft drinks, processed foods and expensive cleaning products.  By making my own simple cleaners, stockpiling and shopping for fresh food, while growing a bit of it ourselves, we get, I think, the best value for money.  We shop at markets when we can and do our shopping at Aldi with a bit at IGA or Woolworths for things that Aldi don't stock.

You might discover that bulk buying with a friend or family member will save you money. You may decide to cut down on meat. You might grow a garden. Again, there are many ways to do this, you just need to think about it and work out what works for you.

In my next post let's share our ways of cutting back.  I'll make up a list of what I do but I'd love to read what you do as well. By sharing our plans and strategies, we might help someone else start making changes in their life.  We'll be waiting a long time to see our governments and the media encouraging us to cut down on what we spend. We have to do this ourselves and help others do it too. It can be done, it can be enjoyable! I know quite a few people who see cutting back as a game. But no matter how you do it, do it. It will help you change your life.