24 Sep 2007 | Comments | Featured, Make Money Tips, Wealth Management | Comments feed

Should you focus on Increasing income or reducing expenses?

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written by KCLau @ KCLau’s Money Tips

Cash flow chart involves simple mathematic calculation: Saving = Income - Expenses. Savings is the priority since it appears first in the equation. To increase saving, we can either increase income, reduce expenses, or doing both at the same time. Which option requires your most attention?

Focus on Reducing Expenses

If your main focus is on cutting down your expenses, it is all about frugality. I found that many of the personal finance blogs preach about how important it is to live frugally. Is it worth your effort? When you don’t know how to increase your income, cutting down expenses is the easiest route to increase your net worth.

50 things you can do to reduce expenses

1. eliminate cell phone
2. cancel newspapers, magazine and other periodicals subscriptions.
3. use energy efficient lamps
4. purchase generic prescriptions when possible
5. buy in bulk when shopping for grocery
6. terminate your gym membership
7. read books at library instead of going for movie
8. cut your vacation
9. stay at home whenever possible
10. stick to your budget
11. cancel your TV subscription
12. use email instead of phone whenever possible
13. compare before you make any purchase
14. plan menus for the week before you shop grocery
15. prepare shopping list to avoid impulse buying
16. go to the store just once a week
17. do not go to restaurant when you are hungry
18. plan the use of leftover food
19. buy clothing at the end of the season
20. shop at discount stores
21. buy used item whenever possible
22. use public transportation, if available
23. have good health habits
24. avoid smoking
25. avoid drinking alcohol.
26. play board and card games, they are cheaper
27. attend concert only if it is free
28. make your own home accessories
29. consider less expensive housing
30. Pack school and work lunches
31. review insurance coverage. Are you over insured?
32. reduce trips outside the home
33. use 10% less than usual
34. stop shopping… not even window shopping
35. change to cheaper brands
36. look for discount coupon
37. buy only when you are offered rebates
38. drink plain water only whenever you dine out.
39. don’t keep more than ten bugs in your wallet
40. cut all your credit card except one
41. do your own car maintenance such as changing oil
42. stop going to a hairstylist
43. rides bike instead of car
44. avoid silly bank fees
45. don’t buy a car
46. just rent a small room to stay
47. share room and split the rent
48. stay with your parents
49. start blogging and it will cut all your other entertainment
50. ask for discount every time before you pay for something

Hard work and no fun!
Wow !!! There is a lot of hard work. But do you really have fun doing all those frugal things? I can only agree with item no.49, which had saved me a lot of money.

How much can you save? It is limited.
No matter how hard you try, you can only cut down your current expenses completely. Most people will celebrate if they can cut 10%. 30% is already too much for most people to compromise their lifestyle. Crux of the matter is, by concentrating on reducing expense, what you get is hard work, no fun, and only be able to save as much as the amount you didn’t spend.

Focus on Increasing Income

If you change your focus to increase your income instead of reducing your current expenses, you will see a whole new world of opportunity.

25 things you can do to increase incomes

1. invest in stocks
2. invest in real estate
3. increase your knowledge
4. sell items you no longer need
5. get a part-time job
6. rent out spare room
7. join MLM
8. start a business
9. learn how to sell
10. make money online
11. get a raise or a second job
12. change your thinking
13. raise your rates
14. get extra work
15. get money from public aid or charities, if you are qualified
16. go back to school to acquire additional skills
17. buy an established small business
18. arrange a better feng shui at your home and your work place
19. start a make money online blog
20. invest in mutual funds
21. take your company public
22. pay less tax
23. learn forex trading
24. invest in ETF
25. get sponsorship from family members, if you dare.

Tough job but a lot of fun!

How much can you probably earn and save? It is unlimited!
Sky is the limit.

Are you a great saver or an income pursuer?!

So, how much time do you spend in a day to increase your income? 8 hours? 12 hours?
Is it viable to cut down the effort to live more frugal? And spend the time saved to actually work out some plans to increase your income?
I am definitely an income pursuer. How about you?

Technorati Tags: increase income, reduce expenses

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