Expense Management
Finance always has two sides, Income Management and Wealth Management. At some points in my life, I had been so focussed on the income side, that I started neglecting the expense side.
Therefore, when working on my finances, I always try to take a closer look at the expense side of things, asking myself the following:
Can I reduce a specific expense, without significant loss of quantity or quality?`
Expense reduction is always possible, but the key question is whether or not I can obtain a similar product, both in quantity as well in quality, at a lower price. A good example is cellphones. Mobile phone price structures are so dynamic, at least in Europe, that it sometimes pays out to change the contract every one or two years. The same goes for electricity, if you realize how often we tend to accidentally leave the light on, or keep our TV on standby. Or how about using Skype fas an alternative to long-distance phone calls?
But, sometimes reducing expenses is simply not desired. I look after my health, and as such I am a member of a fitness club. Although I know, that some fitness clubs request membership fees for as low as only 29 Euros per month, I still choose to pay 55 Euros per month. Why? Simply because my fitness club offers certain benefits, which are important. My fitness studio is located near me, which means that I am more motivated to go there whenever I choose; my fitness club is open until midnight during the week, meaning I can easily go there also after work; my fitness club offers high standard wellness options, meaning I can better reduce stress and relax.
In my opinion, everyone would have the potential to discovering at least one or two things he/she can do to reduce expenses. I find that keeping a thorough track on my finances is an absolute must, but the reward can be great. Even if it is only 40 Euros (or Dollars for that matter) per month: it could be invested in one way or the other, and grow over time.
