Save Money, Make Money: Episode 2

Concept 2: Carry Out "ABC" Classification of Your Monthly, Value Adding and Essential Expenses on Your Consumption Items and Control "A" Class Items of Expenses to Start With

Stage 1

• Before making list of value adding, essential items of your regular consumptions, make a list of all the non-value adding, non-essential items that you actually bought during the month under review.
• Against each such item, write down the quantity bought, it's unit price and by multiplying the quantity bought by unit price, you will get your total actual expenses done by you on the non-value adding and non-essential items that you should not have purchased in the first place.
• Now, make sure that you will not buy these items in future at all. That's your big saving on a recurring basis.

Stage 2

• Now, make a list of all the (value adding and essential) items of regular consumptions.
• Against each item, write down as to how many units of each item you consume.
• Write against each item the unit price at which you buy the item.
• Find out total expenses in your currency for each item. To do this, multiply the quantity of consumption by the unit price.
• Arrange the items in the descending order of value (expenses) of each item.
• Add all these expenses, you will get your total expenditure of the month.
• Take the first item on the list and work out what percentage of total expenses it forms.
• Do the same for the second item on the list and for third item and for all the items on the list.
• You will find that only first 10 or 15 items on the list may account for about 70% to 80% (or more) of the entire expenses on all the items in a month.
• Concentrate on these 10 to 15 items for controlling the expenditure on them, to start with.
• Find out ways and means of controlling expenses on these 10 to 15 items and implement them. You will surely save good amount of your money soon.
• Good luck!!

Also refer: http://home-tips-tricks.blogspot.com/

Saving Money (Money Saved Is Money Gained): Scientific Approach

Ours is the Scientific Approach to Saving Money: Value Adding Approach

First Concentrate Saving on "A" Class Items and Later Worry About Saving on "B" and "C" Class Items

This will prove to be one most important space for you where you will like to come back frequently to find out large numbers of ideas and tips to save your money. And after all, money saved is money gained.

In every post here, which we will add pretty frequently, you will see around 5 ideas/tips on saving money and they will be practical. And with our approach you will save in tons!!

Our approach to saving money is scientific. It is primarily based on the concepts of "Value Adding Management (VAM)". In brief, it means, spend your money only on "value adding activities" and therefore, on "value adding things". Try to minimize and eliminate to spend money on "non-value adding activities" and therefore, on "non-value adding things". There will be occasions when you may not be able to clearly classify the activities as either "value adding" or "non-value adding". You may like to classify them as "non-value adding but essential". Example (in the lighter vein): gift to your spouse or your boy friend/girl friend. You may have to resort to spend your money in buying such a gift but make sure to apply yourself in buying a good, non-expensive yet emotions uplifting gift. It is called "non-value adding but essential expenditure". Put a good control on such expenses also and minimize these activities.

Other approach is to apply ABC classification to your expenses. Please remember that as per ABC rule, 90% of your expenses in terms of your currency will be just of 10% of all your buys. So, control your spending on these just about 10% of all of the items you buy. This way you will not waste your energy in controlling a large number of items which ultimately result only in very small savings. With ABC approach, with control on just about 10% of items of all the expenditure, you can save a good percentage of your 90% of total expenses which can turn out to be very significant amount.

So, stay tuned to this page. Won't you?

Also refer: http://home-tips-tricks.blogspot.com/