When it comes to personal finance, you essentially have two major areas of focus: your income and your expenses. On the income side, you’re dependent on a number of external factors such as the economy, your employer, your tax rate, your industry, etc. These external factors can sometimes work against you, making it can be difficult to make strides in increasing your income in order to improve your financial condition. On the other hand, your expenses or your spending is for the most part, completely under your control. Since you control your spending, you can definitely make strides in this area so that you can increase your bottom line or your savings rate.
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Sure, there are scenarios where you can’t control every aspect of your expenses. For example, maybe you have medical needs that are beyond your control and eat into your income each month. With that said, the majority of your expenses such as housing, food, entertainment, auto are all adjustable and under your control.
This is a very important aspect of personal finance to understand clearly. The point is that you can improve your financial life, whether it is by paying off your debt or boosting your savings, by improving on this area that you have complete control over. The only question is how far you’re willing to take it and whether or not you’re willing to exercise a significant level of control over your expenses.
Control Your Expenses
Housing Expenses
First up, your biggest expense: housing. Most people spend entirely too much on housing. Why? First, the recent real estate bubble created a scenario where way too many people are living beyond their means when it comes to the home they live in. Second, real estate is very emotional and you can easily get caught up in the idea of living in a certain home despite the large expenses it represents. Remember, housing is an expense. Nothing more. As such, we want to keep it low, just like any other expense. Take strides today to get yourself in a better position with your residence. …