Sometimes things happen that we have not planned for, (such as medical emergencies, loss of overall household income, excessive credit spending etc.) all of which lead to very high expenses and we have no idea how to stem the tide. Month after month, our bills become steadily bigger even as our income remains static.
This is truly a worrying development, and therefore before we know it, we are deeply in debt and there seems no way out of the quagmire.
But, there is light at the end of the tunnel. With a bit of fiscal discipline you just might be able to cope with those troublesome runaway expenses. Here are a few ideas:
· The ‘top three expense’ method
Runaway expenses are an acquired trait that, given time, can be dealt with effectively. It is simply a matter of finding out just what you biggest money drains may be.
As a rule, few people include basic necessities as their biggest expenses. Mostly the money is spent on leisure items and entertainment such as eating out, clubbing, and buying extra clothes, electronic appliances and the list goes on. Once you have figured out which categories are unimportant and yet a big drain on your resources, simply curb spending in those categories and before you know it, your runaway expenses would be firmly in control.
· Understand the importance of savings
Runaway expenses exist when we spend all (or even more than what we earn) on what ever we deem necessary.
The opposite of spending is saving i.e. spending less than we earn so as to create a ‘nest egg’ for any future eventualities. However, saving is easier said than done. If you think that you would be able to save any residual leftover amount from your monthly income, think again. If you are truly serious about saving your earnings, then deduct a certain amount at the ‘beginning’ of the month rather than waiting for the month to end. This savings amount should be separated from your regular expense money and preferably invested.
· Involve other people in your game plan
Many times curtailing excessive spending is a collective rather than an individual effort. If you feel that you cannot do it alone, it is always better to involve your friends, family and other people you trust into this initiative. Talk to your kids and explain to them why it is not possible to go out for outings as much as before. Take your spouse into confidence. And, if you are part of a free wheeling overspending crowd that laughs at budgets and savings plans, may be you should consider spending less time with them.
· Be wise – prioritise
This age old adage is still as refreshingly applicable today, as it ever was before. You simply have to set your priorities straight if you are ever going to get the better of your runaway expenses. Your hard money would continue to bleed if you decide that you simply must have that brand new smart phone that has been recently launched into the market. Such spending habits, when your financial means are clearly not enough to support them, could spell disaster in the long run.