Need to cut expenses? Here are some ideas
Non-discretionary expenditures can be relooked too
THE current uncertain economic environment has caused a number of people to lose their jobs while some have had to take a paycut.
A readjustment in their monthly budgets may have to be considered for those whose livelihoods that have been affected by the economy due to the Covid-19 pandemic.
Financial planner and chief executive officer of Success Concepts Joyce Chuah tells Starbiz that there are many areas of expenditure a person can relook at when considering to cut.
“Basically a person’s expenses are divided into discretionary and non-discretionary expenses,” Chuah says.
Discretionary expenses are areas that deal with wants rather than needs while non-discretionary spendings are considered necessary and deals with the needs in one’s life.
While non-discretionary expenses may be the obvious area to look at when cutting expenditures, Chuah notes that even non-discretionary expenditures can be relooked at to see how money is being spent and if any bad habits are present or forming.
“We could look at the area of petrol and toll for example.
“These can be categorised as non-discretionary but perhaps a person can relook at how they can save petrol in their commutes,” Chuah says.
“Let’s say you live nearby your colleague’s house, you can take turns to drive to the office since both are using the same route,” she adds.
Other than carpooling, people could also opt for public transportation and the bus networks in combination with the ride sharing facilities.
The government had recently launched the My30 unlimited monthly travel pass that costs RM30 for usage on the MRT, LRT, Monorail and bus networks in the Klang Valley.
This travel pass will be sold until the end of the year.
“Some may also need to watch their habits on the road. For example I have a friend who drives recklessly and gets into accidents very frequently since she’s always in a rush,” Chuah says.
“Her car is usually in a wreck and while she may be very cautious of other areas of her expenditures, at the same time she’s not taking care of her car properly.
“This bad habit she overlooks causes her to waste a lot of money,” she adds.
She also notes that other people may have the bad habit of parking their cars illegally and this can cause fines to pile up without one’s knowledge.
“I know of a relative who simply parks his car and there was one year the court had to write to his dad as he had an outstanding fine totaling to RM18,000.
“It was a cumulation of all the fines he had incurred over a period of four to five years,” she says.
Another area that can be examined would be insurance payments which are often categorised as non-discretionary spending but Chuah says many people make the mistake of buying the wrong insurance products.
“Many people say that since it’s insurance, they would have no choice but after analysing, I believe people buy insurance that do not stretch their money and they take these as non-discretionary expenditures but they should examine this closely,” she says.
Meanwhile, a person could also look at electricity consumption especially how they could cut costs in this area.
“Tenaga Nasional Bhd is giving a 10% discount for residential electricity usage of between 601kwh to 900 kwh per month until the end of the year.
“Perhaps people can look at how they can cut their usage to fit this category of usage,” Chuah says.
“We need to be mindful of our electricity usage, for example setting a timer for the air-conditioning at night.
“Switch off the lights or fans whenever the room is not in use.
“I know of people who have this habit of just leaving the lights on. It’s not so much of cutting down but a change in one’s behaviour,” she adds.
Meanwhile, there are also some people who have this tendency of overstocking on groceries.
“Some of these cannot be kept for too long especially the perishables items such as vegetables and poultry.
“They have to be thrown away in the end and it’s a waste of money,” Chuah says.
“I also know of a friend who does not like to go to the wet markets (which is cheaper) and would prefer to buy from the upmarket air-conditioned supermarket instead.
“While these are basic expenses, there are many things a person can change too,” she adds.
Other areas that a person could look at are their gym memberships, if they could replace this with an alternative of exercising at home or at the park for example.
“Perhaps this may also be the time to cut down on clubbing which can cost a lot of money or reduce the frequency of dining out. People can go through their day and see what they spend on,” Chuah says.
“Sometimes it is a good idea to just pack some food from home to eat at the office for lunch or dinner during the weekdays and the other social activities on the weekends can be relooked at,” she adds.
For smokers, they may consider reducing the number of packs they smoke per day, she says.
“In the area of online shopping, I will only install the online shopping app when I need to buy something.
“I will then delete the app once I have made my purchase to reduce the tendency of buying unnecessary things,” Chuah says.