The age old question of is it easier to reduce expenses or increase income has been discussed a fair bit. While there are pros and cons to both let's really unpack and give you an answer here :)
For you this is likely to be a quick win. Check out a related MG post about budgeting to learn about ways you can reduce those expenses.
How do you actually reduce expenses?
Let's look at this in a step-by step process
- Get clear on what is important to you when spending your money
- Get clearer by setting money goals on paper
- Track every expense for a month (you'll think us for this later)
- Take stock on what you really need to live vs. what you want
- Trim the fat (expenses in this case) from your life
- Use the extra cash to save towards your money goals
Why expenses can be hard to cut
- It can feel like you're depriving yourself and missing out. In reality your getting clear on what you really want in life :)
- "I don't earn enough money as it is". We can work on that one together
- "I need to spend that money on the $500 purse or golf driver". Do you really need to spend that much to be happy?
- "My friends will think I'm a loser". It may be time to possibly get new friends if this is the case
It's great to go through cutting clutter and expenses from your life however there is another way. This is to increase income! While it must be acknowledged that it's probably easier to reduces expenses, generating extra income can be great fun!
Steps to increase income
- If you don't already figure out how much you earn; if you don't know this get on it TODAY!
- Do your research! A great place to start is Glassdoor, which will arm you with figures when you do decide to negotiate.
- Set up a meeting with your managers and ask them what is important in your current role; more on this in later posts
- Start to build relationships with 4 or 5 reputable recruiters. This can be as simple as doing a search on LinkedIn
- Take on a second job or freelance on websites such as Elance, Freelancer or Upwork
- Consider investing; speak to a financial advisor first!
Why it can be difficult to earn extra income
- It takes time; as you may have heard there is no such thing as a free lunch.
- You may not be successful the first time, although once you work out the formula you'll be doing it with your eyes closed
- You may have to sacrifice; going out with friends every night will mean it will take more time. You can have anything you want however you can't have everything
- Family / health commitments. These are very important considerations, keep in mind there's no much point having wealth if you can't enjoy it
While as they say a penny saved is a penny earned and reducing your expenses usually will not affect your taxes while earning extra income will here's the verdict on whether to reduce expenses or increase income. Drum roll please
The answer to the age old question is; why not do both?
Possibly anti-climatic however this is one of those situations where you can have your cake and eat it :).. We'll be focusing more on this in future posts
What questions do you have about reducing your expenses or increasing your income?
What ways have you done either?
Any other general questions or comments let us know and we'll get onto it for you!
We'd love a like, comment or share and remember to live your Money Glee! :)