In personal finance, the immediate thing that you can do and see the effect is to cut your expenses drastically.

Better to be pound wise, penny foolish

I am sure that you have heard of penny wise, pound foolish. I’ve seen someone who try to save every penny by not ordering drinks when dining out, and even walk to the next grocery shop two streets away just because the package of salt is cheaper by five sen there. But at the time when he is going to get a car, he is too shy to ask for discount from the salesperson. If he can get a thousand ringgit discount on that car purchase, he can afford hundreds package of salts.

When you want to cut expenses, always start with the big items and also those recurring one, such as magazine subscription, TV subscription etc.

Comparison shop on big item

When you are purchasing big items such as cars, expensive gadgets like cameras, house, and renovation, it is definitely worth your time to comparison shop.

These items cost thousands of ringgit. If you can save by only just 5%, the real amount is normally a few thousands ringgit. That one time of saving is giving more impact to your finance compared to refraining yourself from fine dining once in a while. Save on the big item and you will still be able to enjoy the small little pleasures that don’t cost much.

Whenever you comparison shop, not only you will most likely get the lower price with higher quality, you also gain experience and know what you are actually getting.

Have a criteria for shopping

Normally, those people who fall in the trap of excessive spending don’t really have a spending system in place. The easiest thing to do is to draw up a criteria set. You may set a rule that when an item is over a thousand ringgit, you will at least do a simple research online, and compare quality and pricing at three different shops before actually making the purchase.

Another criterion is to make a commitment to yourself that whenever you want to buy something, you need make sure that it will be used within 7 days. If that’s not the case, just don’t buy it yet because you will have another round of shopping really soon. Don’t ever buy something that is discounted but you are never going to use it until months later.

I bought a USB video camera for my PC which I think I am going to use it for an online networking site. But later on, I found that I have no time to hang around there and the camera I bought is completely a waste. I never use it and it is still in original box packaging. Furthermore, the value keeps depreciating and I am too lazy to do anything about it.

Cut down spending the efficient way

As a conclusion, the most efficient way to cut down spending is to have a system in place which prevents you from overspending. Focus your effort on cutting down expenses of the big items with comparison shop.


Personal finance author and trainer

    3 replies to "How to effectively cut your expenses?"

    • Fakri Ghazali

      Great advice KC, i’ve always do research for big ticket items before purchase and enjoy big savings. Always take three to five quotations before decision.

    • Julie K.

      Obviously you need to have a personal discipline to cut down your spending. You may work out some system about what and how to buy goods for your needs. Or another solution is to get more jobs to cover your life expenses….

    • jonathan

      personal discipline & financial prudence is the keywords to your success. savings & growth in your investment is the key words (not some magical chart)

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