You may have heard that it’s not about how much you make rather it’s about how much you spend. If and when you ever consult with a financial planner, one of the questions you will be asked is how much are your expenses. No matter how much you make, if you spend more than you earn it is more difficult to reach financial independence. Make lowering your expenses a goal.

If you have consistent income coming in then that is your starting point. Whether you have one job with a salary, multiple jobs, side hustles, or income that fluctuates, calculate a good average what your income will be.

Next, you will need to calculate all your expenses. From your food costs, utilities, entertainment, loans payments, rent, subscriptions, transportation, and anything that requires money taken from you is an expense. Know what these are on a monthly average. If this number is more than your income you are negative which means you are spending more than you have and somewhere you are borrowing money whether it is a credit card balance, loan, or other.

Let’s say you bring in $5,000 per month after taxes. After you pay for your housing cost, car payment, insurance, food, utilities, dining out, and anything else you spend on, if it is more than $5,000 you need to set a goal to lower your expenses somehow.

What can you live without or consume less of in order to reduce your expenses? Recently, I started taking public transportation from my house. There’s a county bus that is close by so instead of me driving to the metro station and paying for parking, I take the bus which is free to the metro station and back. This saves me about $30 a week in parking. Over time this can save me a good amount of money. Now, it isn’t all sunshine and butterflies. There are inconveniences such as missing a bus and having to wait 45 minutes for the next bus or taking a different bus route and asking my wife come pick me up.

There will be sacrifices that you will endure. Let’s say you give up a streaming service and then there’s a new show on that streaming service that’s a hit. Will you subscribe to watch that show which could last months.

Do you like going out every weekend, hanging out with friends, eating out, and having drinks? Can you reduce the number of times you go out? Can you find different activities that are lower cost?

Humans are creatures of habit. If you are able to lower your costly habits or replace them with less costly habits, your expenses will go down. Once you are able to be net positive where your income is more than your expenses, you will have many options for your money such as saving, investing, real estate, start a business, and so on. Lowering your expenses is a key habit towards financial independence.  If you are interested in following my journey and their journey, follow them on Instagram and email subscribe to get alerts of latest posts or follow me on Facebook, Instagram, and Pinterest.