Reduce Monthly Outgoings

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So often people are looking for the #1 Money Saving Tip, or they ask “what's the best piece of financial advice you can offer?”.

More and more, particularly recently, I am settling on a specific rule that probably trumps all others when it comes to living a Cash Clever! lifestyle: Reduce Monthly Outgoings.

The ways in which you can do this are really simple, but they tend to revolve around one thing – avoid monthly contracts.

There are heaps of things out there that we all view as “must have” products that involve a monthly fee, including:

  • Mobile phones;
  • Broadband;
  • Telephone (fixed) contracts;
  • Utilities;
  • Rent;
  • Mortgage;
  • Newspaper / Magazine subscriptions;
  • World of Warcraft;
  • Gym Memberships.

From the point of view of the company or individual who creates the product or service, monthly fees make a lot of sense (think residual, recurring income), but from the point of view of the consumer, signing up for many monthly, non-essential contracts simply adds to the burden of financial responsibility each month.

Naturally, some items you could not live particularly easily without, such as utilities, broadband and at least one kind of telephone connection, though you could be Cash Clever! with these by making sure you are on the cheapest and most sensible package (often joining phone and broadband is a great way to save a little money).

When it comes to the non-essential – i.e. entertainment or luxury items – the equation you should use to weigh up each subscription is quite simple really: how much value does the contract provide you with? For example, if you pay $50 a month for gym membership, yet you only go once or twice a month, perhaps you should consider another form of excercise, like runnings?

Or, maybe your newspaper subscription means that you don't spend money buying books, so it actually ends up being very cost effective (plus a lot of papers have free DVDs etc, thereby reducing other areas of your entertainment budget too).

Work out what value your monthly contracts deliver to you, and cut out those which are not providing the maximum: you'd be surprised at how much a little financial pruning can increase your monthly bottom line!

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