How To Identify And Reduce Small Expenses

The Covid 19 pandemic forced many to reduce small expenses that previously went unnoticed. What are these small expenses and how can we reduce them to improve personal finances?

Basically, small expenses are all those purchases that due to their relatively low cost are not taken into account, they are even purchases that people make unconsciously, those expenses that little by little empty the bank account and end up negatively impacting personal finances.

Their main characteristic is their inoffensive appearance, giving the impression that this type of expense does not affect our personal finances. In reality, they have a significant impact, especially in the long term, and can represent between 5% and 20% of the expenses of a person, and even ruin their financial situation.

There are cases in which people are not able to achieve their monetary objectives because of small expenses, even with good liquidity and financial solvency, they cannot advance in part thanks to bad economic habits.

During the pandemic, some of these expenses were reduced due to quarantines, restrictions, and the introduction of teleworking. However, today they are again invading people's financial pockets due to the economic reactivation.

To reduce small expenses and improve personal finances, experts recommend applying practical strategies that will be of great help to mitigate these types of purchases.

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How can you reduce small expenses to improve personal finances?

It is important to identify these small expenses that consume your money, having full knowledge of these expenses will help control them.

After identifying them, you must establish the amount of money you want to allocate for this expense, for this it is necessary to budget and prevent these expenses from affecting personal finances. In some cases, it will not be necessary to eliminate them completely, but if it is important to keep these purchases at a minimum. For example, you can make coffee instead of buying it or prepare lunch at home to avoid spending money in restaurants. 

Finally, avoid new small expenses by having knowledge of these small current purchases, how they arise and in what scenarios they occur. This will provide the necessary tools to identify if other expenses of this type are being incurred, keeping your personal economy in order.

Controlling small expenses will help to significantly improve your personal finances, because having controlled expenses will increase the flow of money and achieve the proposed objectives and goals. Of course, it is not about being stingy or depriving yourself of enjoying the money and the luxuries that it brings, but about knowing how to use it wisely so as not to fall into these types of expenses and alleviate the personal finances that have been so affected by the pandemic.