It is crucial as an individual who is striving for financial freedom to be able to recognize different type of expenses in our lives. It is a proven theory that it is easier to cut your expense than trying to earn more income. In order to maximize profits, a manager will try to minimize expenses before trying to gain more revenue. And we can learn from that. By recognizing our expenses and ways to handle them, we will be able to create more revenue in our lives. This article will help you to do that.
According to Rockefeller diagram, following ten expenses are different types of expenses that exist in our lives. Be aware that certain individuals might have more expenses in their lives. In order for us to achieve financial freedom, always bear in mind that our main goal is to minimize our expenses.
Kindly spend some time reading through different type of expenses. (Remember them if you have to)
1. Giving 2. Self 3. Taxes 4. Shelter 5. Household 6. Auto 7. Fun & Entertainment 8. Insurance 9. Debt 10. Business expenditures
In this article, I am going to talk about first five expenses and in my next article I will talk about next five.
Expense Category #1: Giving
Most people do not consider this as an expense. Some will even completely eliminate this and not have anything to do with it. In bible, Christians are encouraged to allocate ten percent of their income as a tiding. Most successful people actually allocate ten percent of their income to benefit others. If you were to think about it, it is making sense! We have to agree that there is some “force” providing blessing of money for all of us. If that “force” were to choose who should he/she provides money to, “force” would rather provide money to people that are generous. Beside, there is no point in being a rich scourge.
Expense Category #2: Self
Bear in mind that successful people save a part of their income first and live on what is left over. If we practice that, it will make a huge difference in way we handle our money. By saving a part of our income first (try to save at least 10% every month), we will be more careful on way we spend our money. With a proper budgeting system, eventually you will be able to save enough to invest your money to make more money.