As we’ve mentioned before, there are only two things we can control when it comes to money. How much we make and how much we spend. Of the two, spending is a much easier thing to have influence over.

If you ever read those blogs where someone goes from being in debt 100,000+ to getting out of it, to becoming a millionaire, you will see one very common thing and that is their ability to cut down on their expenses.

And once they cut down their expenses, they’re able to put more money into paying off their debt. And once they have finished paying off their debt, they continue to keep their expenses low and take the savings and invest it.

And this continues on and on until they’re worth millions.

That’s also how I started. Even after I started working and was making 42,000 a year (3500 a month), I was spending less than 1500 a month and saving the rest of the money. Within a few months, I had saved up enough to buy my own 3 bedroom condo and rented out the extra rooms, bringing my monthly expense down even further (even though I have a house loan). All while still paying off my student debt.

And now, even though I am making more money, I still continue to live on a small portion of that which gives me the freedom to do more of what I love.

And the key for me to get here is today’s topic: our spending.

As we’ve mentioned in day 2, there are two main ways we spend money. We either spend it on things we enjoy (fun), or on things that are required for us to survive (daily expenses).

Today we’ll look at our daily expenses.

Common things that fall under daily expenses are:

  • Shelter
    If you own your own place, then it would be the monthly instalment and the property tax and any other sinking funds you might have to pay.
    If you rent, then it would simply be your rent
  • Utilities
    This includes gas, electricity, water
  • Broadband
  • Phone plan
    This may also include any payment plan you have for your phone
  • Transportation
    Including everything that goes into maintaining the car
  • Insurance
  • EPF
  • The minimum payment for all your debt
  • Groceries
  • Mamak (because it can be cheaper than making your own food)

Note: this also means that the following are not part of your daily expenses:

  • Any subscriptions you may have
  • Eating out at cafes and restaurants
  • Any shopping that is not grocery related

If you had seriously looked at your phone and internet, your rent and your transportation expenses, you will have found ways to cut your daily expenses. Hopefully by now it’s under 60%.

Which also means that 40% can now be spent on things that you enjoy.

If you’re under 60% and you can still find other ways to cut your daily expenses, then go for it!

My daily expenses is at 1,580, or about 40%, which leaves me with 60% to spend on other stuff(are you starting to see how I was able to afford travelling for 2 months?)

So your task today is to see how much of your income is going to daily expenses. If you’re under 60%, then you are doing really well! And if you’re not, then brainstorm ways you think you would be able to cut down your expenses.

One last thing. Even though we’re talking about our daily expenses as a percentage, it is really important to understand that it’s a lot easier for me to have such a low number because my income could be higher than yours. That said, you should be able to get to 60% as well if you make more than 2600 / month.

If you don’t, it’s okay. We’ll be talking about how to make more money in a few days 🙂

But before all that, tomorrow we talk about play (and how we should always be spending some money there).

Your Task

  • How much of your money is going into your daily expenses? Are you happy with where you’re at or do you think that you can still lower that expense?
  • Share with the group how much of your income you’re currently spending on daily expenses and what tips you have for others to reduce their expenses
Do you know anyone who will thank you for sharing this program with them? Here's your chance: