How can I reduce my monthly expenses

We'll give you some key advice to help you control your monthly spending and save successfully, month after month

Reducing monthly expenses is one of those goals that always finds its way into our New Year's resolutions. However, since the beginning of the 2008 economic crisis, limiting expenses and consequently saving money have gone from being desirable goals to necessities for lots of people. Perhaps some years ago reducing expenses was a priority for families with children, whereas couples and single people could afford a certain amount of disposable income. Nowadays, that situation has changed, and almost if not everyone needs to save to have a financial cushion for the future.

There are likely many websites on the internet offering financial miracles, but developing a financial cushion that us allows to meet unforeseen events can only be achieved with a lot of foresight, planning, and reducing unnecessary monthly expenses.

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Analyze and understand all your monthly expenses

Before starting to talk about spending guidelines and other tricks to help us achieve our goal, we must keep in mind that reducing expenses is a long-term process and not something we can do overnight. As such, it's necessary to dedicate time analyzing what we spend our money on every month. Start by gathering all bills and receipts from the previous month, and write down all transactions in a notebook or in a computer tool such as an Excel chart or an app designed for this purpose.

While it may be tedious and boring, being able to see all monthly expenses in a single document is an excellent way to assess any essential expenses, like mortgage or building management payments, and other expenses that can be reduced or directly eliminated. By just being aware of what you spend every penny on, you'll be able to start taking measures and implementing ways to reduce your monthly expenses on a daily basis.

Saving is a priority, not the ultimate reward

The basic principle of financial planning traditionally deducts expenses from your income, resulting in saving more money. In other words: expenses - income = savings. However, doing the opposite is becoming increasingly valued. In other words, change the order of the expression so that you first deduct savings from your income. This creates the following mathematical equation: income - savings = expenses. Although it seems strange at first glance, when considering our daily and monthly finances, the order of the factors does in fact greatly change the product.

By considering savings as part of the equation and not its result, we're taking into account the percentage of savings that we need to set aside from the first day of the month. This way, that amount will be deducted from the beginning, resulting in less monthly expenses and more money for the future. We simply set aside the desired percentage from our paycheck as soon as we receive it. Search for a product that builds profit (for example, a savings account), whose conditions satisfy your needs and allow you to set aside money when managing your monthly expenses.

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Use tools that help you to limit expenses

However many changes you make in your daily routine, if you want to reduce monthly expenses, we recommend that you use some sort of tool that helps you to manage your finances. The new BBVA Bconomy tool provides you with information on your finances that you weren't previously aware of. This enables you to analyze your expenses in detail, discover how to reduce them, and save to achieve your goals more easily.

Thanks to the new tool from the BBVA app, which you can access on your smartphone, you will be able to discover where you can save money by analyzing your financial situation and comparing your expenses with other similar profiles.

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