The ultimate money making trick

Let's start with a small exercise. Let's list down all our expenses on a monthly basis from January 2020 till July 2020. You may not have a ready record but you can still note down your credit card dues every month. Also, from your bank account statement, you can get a rough idea of inflows and outflows every month. The result should look somewhat as described below.

Have you done your charting? Are you surprised? You already knew that you are spending far less than what was your average expenditure during the pre-lockdown phase, but you will realize the quantum of fall only by performing this exercise. In the real-life example presented in the table above, the person was able to curtail expenses by more than 50% during the lockdown. Even post-lockdown the expenses are down around 20% from average despite the fact that impulse spending has increased due to the long halt on spending. A few questions that one may ask oneself based on the exercise are:

• What is the major portion of spending that has gone off the shelf?
• Does that portion contribute significantly to your status or well being?
• If yes, then how did you survive without that thing/service during the lockdown?
• What expenses contributed to increased spending post relaxations in the lockdown?
• Which other expenses can you cut down so that it leaves more money in your account at the end of every month?

Answer to these questions can help you in starting afresh with your savings and investment cycles. Many people want to increase their savings and continuously look for more avenues to earn money. The focus is on the income side. Little stress is laid on the portion of expenses. People don't realize that increasing income isn't in their hands but decreasing expenses is definitely in their hands. The lockdown has shown us that a good and healthy life doesn't require the kind of expenses that we used to do before. Even if incomes are going to stagnate and salary hikes will be limited, the fall in expenses is more than enough to compensate for all the losses. What needs to be done is a careful analysis of our existing outflows and put a lid/mesh on the outflow pipe. Common expenses that can be avoided are summarised below.

By having a firm grip on your expenses your aim of earning more can be achieved in a faster and efficient way.

Impact Assessment

If the practice of rationalizing expenses is made a habit and is inculcated in the daily routine then in the long run this can add a couple of lakhs in your investment corpus. Continuing with our earlier example, if we assume a savings of Rs. 25,000 per month and invest this in a debt mutual fund yielding 7% return then in a period of 3 years we will save a total of Rs. 10 lakh.

Such is the amount of money that one can make if the focus shifts from inflows to outflows. Expense reduction is like finding a treasure that was there by your side always. It does need some effort, patience, and realization to start a war with expenses but the war is definitely worth it. So when are you starting your war against expenses? Do it today, do it right now!

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