Personal finance series : Cut the fat


This is the most crucial part of the personal finance. And the most difficult one than the previous posts.


If you are on this post, it means that you have realize the importance of controlling personal finance, as shared Personal finance. What you have done as mentioned previously in What’s your number?, is you have also made an effort for to know what your personal expense are for the month.

In between, I had shared a personal finance template with some of the readers. If you want your free personal finance template, sign up for Free template

So, what are the next steps to control your personal finance every month. If you are aiming for a financial freedom, this is a vital step in the process.


Our salary increases only at a finite pace, while out expenses happen out of necessity, wants, impulsive decisions or due to lack of financial controls in our home.


Current reality :


Most of us work really well during our job…..

There is a clear focus on the task, along with the deadline and the realisation of the fact that non performance is not an option. So much so, that we are willing to sacrifice our family time, personal time, health and even food to make sure that the work is completed on time and to the satisfaction of our boss.


Irrespective of the fact, whether you were working for 8 hours or 15 hours for your job, the salary is a fixed amount credited to our bank accounts.


During the month does our expenses remain constant?? – there is a wedding in the family, the festival season is coming, house maintenance is required or just plain simple — onion prices have gone up!!


Some of these expenses may or may not be under our control.


What is definitely under out control is how to manage our finances. It is an equal priority, if not more for all of us today.


Do you have this feeling, even after working all your waking hours on the job, with utmost dedication, commitment and sacrifice :

  • My salary is not enough,
  • After the EMIs (home and/or car), there is barely anything left…
  • My bonus and/or salary increment just vanished this month….every month…
  • I need to be careful about my spending…. It’s the last 10 days of the month now…
  • I wish I could earn just a bit more….
  • I wish I could save and invest a bit more….
  • I wish that I had money to invest in professional training etc….
  • I wish I could take vacations to Paris, London, Amsterdam….

Well, you get the idea…



Do not worry. The only consolation is that you are not the only one. Almost everyone around you feels the same. Since, most of us follow the rules society defines for us, we suffer from the same problems as the society around us.

So, now that we know of importance of personal finance and knowing your numbers…

Well, get ready for action……….The expenses are arranged from non negotiable to wasteful. 


Split your expenses in the following categories :



Necessity : These are basically expense as EMIs, Rent, water and electricity bills etc.

Difficulty level : Almost next to impossible,

Saving potential : Minimum (requires too much efforts),

Priority for personal finance : Lowest,

Thinking change : Highest.


The questions to ask for these expenses are:


  • Can I manage my rent or EMIs better? (might require assessment of your living spaces)
  • Can I use resources (electricity, water etc) more efficiently, save on the bills?
  • Am I overpaying for the house help – domestic help, cook, driver etc




Wants: These are expenses, which are not required for daily life, but done due to society pressures. Some e.g. : branded clothes, big car, fancy and latest gadgets. All of these are justified with following reasons :

  • We have a big family so big car is required (think of running costs, insurance  and maintenance),
  • This brand makes me feel/look better (this is what the brands want you to think!!!) ,
  • I need this gadget for my fitness, time management or vacation needs (associating a spend with a basic need!!!)


Difficulty level : Difficult but manageable,

Savings potential : Highest,

Priority for personal finance : 2nd highest,

Thinking change : Medium


The questions to ask for these expense are:


  • Do I really need to spend Rs40,000 on a phone every 6 months?
  • Is the brand really worth the costs when it comes to quality,
  • Am I buying brands for myself or for family or just to show off to my friends and colleagues,
  • Are my brands or car size an extension of my personality.

If you answer Yes to any of these questions, you need to seriously evaluate your current personal finance situation. You are spending money to make yourself feel better and to show off…..



Impulsive decisions : Have you noticed how the chocolates are placed right at the check out counter in the supermarket and your kids usually see them….. wait, its not just for the kids…. It works pretty well for the adults too..


Have you noticed how online shopping sites seem to know that if you are buying a tablet, then you might also need a fancy cover…. And perhaps a keyboard to use it even better…


Difficulty level : Easiest,

Savings potential : Highest,

Priority for personal finance : Top focus,

Thinking change : Not required, just do not make impulsive decisions.


The questions to ask for these expense are:

  • Did I want to buy just the tablet or 3 more things with it….
  • Do I really need to buy the more fancy cover….
  • What is my use of the product…. If only for surfing, do you really need to buy a tablet keyboard….
  • Am I buying what I need or what companies keep telling me what I need……


Just stop and pause for a moment before making such a buying decision. Just count from 1 to 10, the product will not disappear if you wait 10 seconds….

Bonus : If you see words like this : “Limited period offer”, “Buy now”, “Valid only for 1 more day”… run from those places….. the advertisers want you to buy, by creating a sense of urgency… which is temporary and usually result in regret later…..




Wasteful expenses : A very simple example of this is having Netflix and Amazon Prime, along with an Airtel DTH and/or TataSky.. more of everything, and use of nothing.. Even when it is used, it is not really a productive use of your time.

Difficulty level : Easiest,

Savings potential : Highest,

Priority for personal finance : Top focus,

Thinking change : Not required, this is a wasteful expense.


The questions to ask for these expense are:

  • Do I need 2/3 or even 4 TV or subscription services?
  • Do I even use all of them, despite paying a monthly bill…
  • Do I use the gym enough to pay the monthly membership…. (why do you think gym have membership plans and not pay as you use concept…)
  • Do I make short term impulsive decisions because “it is the in thing”…

These are some initial steps on how to start controlling your personal finance situation. Do not think for a second that this is an easy exercise.

This step will not be useful if you do not take actions on your decisions. Do not delay your actions for next month, next week or next day…. The time to start is now.

Did you notice above “the time to start is now” – does it creates a sense of urgency in your mind? 

Remember, your earnings are limited, and only you can control your expenses…. No one will do it for you!!

Have a financially nice week.

General Personal finance series : Cut the fat

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