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
- eliminate cell phone
- cancel newspapers, magazine and other periodicals subscriptions.
- use energy efficient lamps
- purchase generic prescriptions when possible
- buy in bulk when shopping for grocery
- terminate your gym membership
- read books at library instead of going for movie
- cut your vacation
- stay at home whenever possible
- stick to your budget
- cancel your TV subscription
- use email instead of phone whenever possible
- compare before you make any purchase
- plan menus for the week before you shop grocery
- prepare shopping list to avoid impulse buying
- go to the store just once a week
- do not go to restaurant when you are hungry
- plan the use of leftover food
- buy clothing at the end of the season
- shop at discount stores
- buy used item whenever possible
- use public transportation, if available
- have good health habits
- avoid smoking
- avoid drinking alcohol.
- play board and card games, they are cheaper
- attend concert only if it is free
- make your own home accessories
- consider less expensive housing
- Pack school and work lunches
- review insurance coverage. Are you over insured?
- reduce trips outside the home
- use 10% less than usual
- stop shopping… not even window shopping
- change to cheaper brands
- look for discount coupon
- buy only when you are offered rebates
- drink plain water only whenever you dine out.
- don’t keep more than ten bugs in your wallet
- cut all your credit card except one
- do your own car maintenance such as changing oil
- stop going to a hairstylist
- rides bike instead of car
- avoid silly bank fees
- don’t buy a car
- just rent a small room to stay
- share room and split the rent
- stay with your parents
- start blogging and it will cut all your other entertainment
- 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
- invest in stocks
- invest in real estate
- increase your knowledge
- sell items you no longer need
- get a part-time job
- rent out spare room
- join MLM
- start a business
- learn how to sell
- make money online
- get a raise or a second job
- change your thinking
- raise your rates
- get extra work
- get money from public aid or charities, if you are qualified
- go back to school to acquire additional skills
- buy an established small business
- arrange a better feng shui at your home and your work place
- start a make money online blog
- invest in mutual funds
- take your company public
- pay less tax
- learn forex trading
- invest in ETF
- 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
30 replies to "Should you focus on Increasing income or reducing expenses?"
My definition of FRUGALITY = never allow others to earn your money easily but you must learn to earn from others instead. In short, always go for value for money products. Sometime expensive product not equal good quality. Blindly follow trendy products is definitely drying up your pocket and is meaningless just because you want to show off. Leave by yourself and not others.
I don’t know if anyone have the same situation like myself, I usually save 85% of my income rm1.5k and I living with my parent. I also income pursuer like doing collecting recycle used item for sales but not much every month. I do trade in stock but still not much luck I have. I am lucking enough to live near work place about 1km from my house, i drive so every month petrol it about rm150 but this is too much for me too. I am reducing all unneccessary expense like not movies,eat outside, or anything but I will spend money if I see value. Now I am saving hard enough to buy house to live coz house price in Melaka now way to high like new laucnh rm250k. to much.
I think my goal to save is from my mom.Thank mom
Frugality is a good habit everybody should practice to perfection.
Did you spend only RM225 per month? Don’t bullshit!
Hi, KC,
I always remember what Robert Kiyosaki said that LIVE BEYOND YOUR MEANS rather struggling to reduce your expenses! I invest in real estate, stocks and mutual funds, but so far I have the best returns in property investment compare with others, what do you think?
[…] Should you focus on Increasing income or reducing expenses? […]
Make a point in your life saving is partly automatically process in your earning. For example, did Tony Fernandes worry about his saving every month? That our goal in life…No worry about saving.
I’m a believer of “Income Pursuer” many years ago thus got no problem in balancing the expense and saving. However, it will be MUCH BETTER if i am Income Pursuer at the same time “Frugal” on expenses, then, the amount of saving will be UP UP UP at a much faster rate.
Eleven ways to cut your spending…
Recessions are a death warrant for the dollar. Each one causes the dollar to shrink more and more. The following are ways you can stretch that dollar to make it go further. You’ll utilize some of these ideas and others you’ll shake your finger no at….
I believe most of the people already an expert on frugality but less focus on increase income, because increasing income need hard work also, at least at the beginning, else I think if your income per month >rm10k reducing monthly expenses will be helpful maybe…
I doing three things to increase my income
1. Working oversea. (Fortunately we have an haven beside us Singapore)
2. Start a small vending business. (Not buying franchise)
3. Trading forex (It is challenging in a good way)
What about invest in gold?
I hope to become an income pursuer and not just a saver..still learn how to increase my income, hope to learn from here too..
Suddenly i have a lot of ideas after reading just the introduction! Thank you Mr. Lau! God bless You!
welcome
Millionaire Mindset
Rich people focus on their net worth.
Poor people focus on their working income.
It is the best if we can increase our income and reduce our expenses at the same time…. When we increase our income without controlling our expenses, it is pointless…
Government already spend our money or keep it in their pocket so they ask us to save la…
I use to be a frugal saver, but since last yr, I’ve learnt its way better to be Income Pursuer..
Unfortunately..not many people know of this..
maybe that’s why the government can blatantly suggest people to “save and change their lifestyle”
sad…
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[…] Should you focus on Increasing income or reducing expenses? […]
Why choose between the two, why not focus on both inreasing income and reducing expenses at the same time
Hi BT Khoo,
You can actually do both. The idea is about spending more time to increase income, which will bring you greater effect in the future.
[…] another interesting version to this “save or invest” is that presented by KC Lau. He presents the view that we can only save “that much”, whilst investment income is […]
work oversea to increase active income.
there’s heavy sacrifice but worth it.
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[…] KCLau’s Money Tips – Should you focus on Increasing income or reducing expenses? […]
I struggle with balancing this as well. When first getting started, I think most people will find themselves needing a mixture of both more income and less spending. Just in the last month I found myself doing many things on your list here (or at least considering them) and it’s definitely helping. Now I have a few more to consider trying out. Thanks! 🙂
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[…] presents Should you focus on Increasing income or reducing expenses? posted at KCLau’s Money Tips. Savings is the priority since it appears first in the equation. […]
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