Step 10: Identify your Variable Expenses

Step 10 of the 100 steps mission to financial independence: Identify your Variable Expenses
Step 10: Identify your Variable Expenses

In step 9 we looked at fixed expenses, but apart from these regular payments of a set amount, you most likely also have regular expenses which vary from one month to the next: your so called variable expenses. Indeed a variable expense generally:

  1. is an expense of a variable amount that you have some control over
  2. has a regular time interval
  3. is needed for day-to-day living
  4. you can cut down by making small lifestyle or behavioural changes.

An example of variable expenses include groceries: you need to eat for day-to-day living, they have a regular time interval, as you probably go to the supermarket several times a month but contrary to your fixed expenses, you have some control over the amount on your grocery bill. Continue reading “Step 10: Identify your Variable Expenses”

Step 9: Identify your Fixed Expenses

Step 9 of our 100 steps mission to financial independence: Identify your Fixed Expenses
Step 9: Identify your Fixed Expenses

From the previous step you should now have your base expense categories identified. In the next few steps we are going to dissect these expenses and classify them into three different types, starting here in step 9 with having a closer look at your fixed expenses. Typically a fixed expense:

  1. is a set amount that you have little to no control over
  2. has a regular time interval (e.g. monthly or yearly for example)
  3. is needed for day-to-day living
  4. you cannot cut down without making a big life change or running substantial financial risk

(I classify insurance as a fixed expense, hence the addition of “without running a substantial financial risk”.) With fixed expenses you can tell at the start of each month they will be coming up and how much you will be charged no matter what you do. You know that every month you’ll be charged rent, or that you have to pay your mortgage.

Continue reading “Step 9: Identify your Fixed Expenses”

Need over want

Steps in management theory

It is so easy in management to fall into the pit fall of seeking to be the friend or colleague over being the manager.

Many new-be managers are so focused on being “liked” (or avoiding being disliked) that they forget that the job of a manager is ultimately to lead a team of people towards a goal. Indeed many managers seeking to be “liked” are doing so not in the interest of the team or overall objectives but rather to cover up their own insecurities they have about their ability to lead. Leaders who seek “being liked” often become side-tracked onto making decisions not in the interest of the team (group) of people but rather into feeding their own need to feel accepted by outspoken individuals on that team. Continue reading “Need over want”

Step 8: Categorize your expenses

Step 8 of our 100 steps mission to financial independence: Categorize your Expenses
Step 8: Categorize your Expenses

By now you have (hopefully!) been tracking your expenses for a while so you should have a reasonably good idea of your spending. Ideally you would have at least 1 month’s worth of data to look at, if you have more than a month that’s even better. In the next few steps we will be looking at your expenses in detail to get a better idea of where your money is going, how much you spend on various categories and most importantly, whether this spending pattern is aligned with the way you WANT your money to be spent.

The first action step will be identifying the different areas that you are spending your money on by categorizing various expenses into groups, which will allow us to analyze in which areas of your life there is a potential to save more (or less) money. Continue reading “Step 8: Categorize your expenses”