How to ensure that you spend less?

It can be incredibly frustrating when you feel like you simply don’t have enough money. It’s a situation that many of us have experienced at some time in life.

But how do you react when you are in such a position? Do you bemoan your lack of income? This is a common response, but it can actually be misleading.
                   
When thinking about the lack of cash that we have available, it’s certainly tempting to complain that we don’t earn enough. If only we had a better paid job, then surely our financial problems would be over. But would they really be?

Many of us notice that the more we earn, the more we spend. If we get a 5% pay rise then we don’t suddenly start saving more money as a result. Instead, we may find that we spend more on different items, products and services.

Is this because there are now more necessities in life that we need to buy? This certainly seems rather unlikely.

A more obvious explanation is that we often make spur of the moment decisions. We don’t think things through. We fail to budget.

It’s easy to see how spending levels can get out of control. If we keep buying more stuff, without considering how much we’re spending then we could be heading for trouble.

So what are we to do?

If you really are short of money then you might want to forget about your income levels for a moment. Instead, why not think about your levels of expenditure. How much are you spending each month? Where is all your money going?
                            
Most of us may actually struggle to answer these fairly simple questions. We may think that we have an idea of where the money goes, but how close is this idea to the reality?

Typically, when people start to ponder this question, they initially conclude that most of their money is spent on rent or mortgage repayments. These are typically large outgoings and attract a lot of attention.

They may be areas where savings can be made. You may, for example, be able to move to a cheaper house.

But it’s more likely that these large expenses are actually hiding the spending areas that are really hitting you hard. If you dismiss your problems as being all about a lack of income and the high rents that you are facing, then you may be missing the root of the problem.

Draw up a simple spreadsheet and start calculating how much you spent in the last month. You could use your most recent bank statements to assist with this process.

What you’re likely to find is that a large amount of money is wasted on luxuries, or purchases that you didn’t really need to buy. You may discover that you spend a surprising amount on clothing, or eating out.

But it’s only when you start noting down your spending levels that you start to see the true picture.

By keeping a record of what you spend, you can start to cut down on areas that simply aren’t critical to your lifestyle. That’s the best way to make sure that you spend less and have more money available as a result.

Simon Barnett takes a keen interest in all aspects of personal finances. He also contributes to Offer UK online, helping consumers to save money when shopping online.