You’ve made a budget, and you are short of cash each month. There are only two ways to increase your monthly cash flow: You must either reduce your expenses, or increase your income.
It’s not easy to instantly increase your income, so to generate extra cash, start by taking a look at your expenses.
Distinguish between fixed expenses (those that don’t change from month to month, such as rent or mortgage payments) and variable expenses (that change based on consumption, such as food, drink, water, electricity, etc.).
First, consider if any fixed expenses can be eliminated. Then, think about how you can reduce variable expenses without a big impact to your lifestyle. If you really need to save, you can consider making lifestyle changes, but these will be harder to sustain.
Perhaps food costs can be reduced by reducing snack food or a heavy meat content, or eating out less often. Maybe you can rent a movie with friends rather than going out for the night.
Then look at your income. Can you increase income by turning your hobbies into a side business? Can you work overtime or get a second job to cover some of your expenses? Perhaps you can barter your time and talents with someone who can provide a product or service to you and reduce your expenses that way.
What do you do if reducing your expenses and increasing your income isn’t enough to balance your budget? It may be that you have too much debt, so your next step is to read our suggestions on how to pay off your debts.
This tip provided by the authors of Power Spending: Getting More For Less available in ebook and soft cover formats.
