limit your expenses

Limit Your Expenses With These 3 Steps

If you do not change direction, you may end up where you are heading.

Lao Tzu

To gain control over your expenses and your financial habits, you have to start somewhere. After setting your goals and figuring out your inner circle, it is time to get more practical. In this article I will share three steps you should get started with right now to raise your financial awareness.

Raising your financial awareness can be done in many ways. Personally I find the next three steps some of the most efficient ones. By following these steps it will become very clear where improvement is needed. These three steps go hand in hand with each other which increases their effectiveness.

Review your expenses

When it comes to reviewing your expenses, you should include both monthly (like rent, subscriptions, cell phone, insurance etc.) and discretionary expenses (all other purchases that you choose to make). Then write down each purchase with their corresponding amount and make sure you do this for the past 3 months. Instead of doing this for just one month or a couple of weeks, revising at least 3 months provides a more accurate insight into your spending habits and lifestyle.

After listing all the past payments, I personally like to rate them according to their necessity. I generally rate them from 1 to 5, where 1 is absolutely unnecessary and 5 is an expense that couldn’t be avoided and thus super necessary (for example your car broke down and had to go to a garage, or a more obvious one; rent or mortgage).

By doing this you will get a more detailed understanding of your lifestyle and you will be able to see if and where you’ve been carelessly spending money. The trick is to be as critical as possible and to rate your expenses objectively.

If you are having trouble rating your expenses, ask yourself these questions: Could there have been a more affordable alternative? Could I have made this purchase another time? Did I really need this right now? If the answers are ‘yes’, ‘yes’ and ‘no’ respectively, the purchase was definitely unnecessary. You can also use these questions in the future, before spending money.

Create a budget

Budgeting is often perceived as boring or uncalled for. Some people don’t want to ‘waste’ their time figuring out their limits to specific purchases or already decided they will have a hard time sticking to it. But having a budget, and sticking to it, should not be neglected if you want to be in control of your money. Budgeting can raise your awareness immensely, because oftentimes you’ll be tested when discipline is required.

The goal is to create a budget that fits your income, not necessarily your lifestyle. After you have evaluated your spending of the past 3 months, you should be able to see where you ought to cut expenses. When you are creating a budget, you will put that into practice.

Now, it is true that a lot of people don’t know how to stick to their budget. This might be because they lost sight of it or don’t check up on their budget regularly. The most effective method is envelope budgeting. With this method you will always have your budget at hand.

You write down certain categories on separate envelopes and inside you will put cash money that does not only represent the amount you are allowed to spend, but will also be the money you are using to pay. Using cash instead of your debit or credit card will make you very conscious of your spending. Suddenly the significance of your expenses is felt, whereas using a debit or credit card can take away the real value of our money.

Track your expenses

Tracking your expenses is another little trick to raise your awareness. Personally I like to limit tracking to my discretionary expenses only, since we oftentimes fail to recognize their influence. The best way to do this is to carry a little notebook around with you and jot down each purchase you make. And then I mean every single thing, no matter how small they might seem.

Over time you will tell yourself to stop making the silly and unnecessary payments, because you just don’t feel like taking that notebook out and write them all down.

This method, however, does require quite some commitment and discipline. So that just begs the question; how committed are you to taking control over your finances?


To kick start your financial growth and to build a great foundation regarding spending control, you should review and evaluate your expenses from the past 3 months, create a budget that fits your income and start tracking all your expenses from now on. These steps most likely will give you a reality check and show you how carelessly you have been handling your money. But don’t worry, soon enough you will be on the right track!

Lots of love,

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