I lost control of my spending in Summer 2023 and regularly overspent my budget. At some point, I even stopped tracking my expenses because I didn’t want to face the reality of my overspending. It took a lot of effort but I clawed my way out, got my spending under control and currently no longer use a credit card.

Since I got my spending back under control, I realised the benefit of my expense reduction keeps compounding. And since I’m doing the Uber frugal month challenge this month, it’s a reminder on why expense reduction is great. I know there’s a lot of focus on increasing income which I do as well but doubling up with reducing expenses at the same time is a game changer.

The 3 key benefits of expense reduction are:

  1. It frees up money for me to invest for the future.
  2. The reduced spend carries forward to the future so the impact compounds going forward as it’s permanently out of my budget.
  3. If the reduction is permanent, it reduces how much I need to save/invest for the future as my FIRE number drops.

Exemplified, if I reduce my monthly expense by €100, this frees up an additional €1,200 for me to invest annually. My FIRE number reduces by €30,000 and the €100 invested monthly becomes €68,730 in 20yrs at 10% annual return

I already streamlined my budget so there’s not a lot to cut out with the frugal month challenge. What I am getting better at is not spending money on random things I don’t need. I have zero urge to spend and I’ve only spent €24.24 on groceries top up at Lidl month to date.

What I am doing instead of mindless shopping is improving my sourdough bread making skills, spending at least 2hours on walks/outside play time daily and reading a ton. I’m looking forward to see how I end the month.

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