Five steps to killing your living expenses

Living expenses are the regular costs that you typically incur on a month by month basis. This can include essentials such as the cost of your mortgage or rent and council tax. Also things such as the cost of electricity, gas and water services and the repayment of existing loans and/or credit card balances. Then there are costs such as the cost of groceries, school fees, medical and dental care and the cost of commuting to work and running a car.

Most of us will recognise a lot of those and will appreciate that they represent fairly essential cost categories. Additionally, though, there may also be a host of other monthly costs. The following list is by no means exhaustive but these miscellaneous costs may include entertainment (sports events/cinema/theatre/gigs/CDs /DVDs, etc), alcohol, gym membership, magazine subscriptions, clothes, beauty treatments, haircuts, and computer games.

There may come a time, however, when you pause and realise that you are spending more than you can afford to, or more than you want to. This moment of realisation may be occasioned by viewing a bank balance, being made redundant or by seeing that you're not going to be able to meet your savings or investment goals.

The good news, though, is that it's often possible to trim quite substantial costs from your monthly expenditure just by making some simple changes. Let's look then at how we can do this:

Step 1: Understand what you're spending money on:

Before you can effectively reduce your living expenses, you need to understand just where all of your money is going. There are two main tools that you can use to get a full picture of your costs. The first is to review your bank statements. If you look at three months' statements, this should give you a good feel for where your money is going. The alternative method is to keep receipts from everthing that you spend money on for a period of time. Either way, the key then is to group your costs into categories, so that you can see what types of things are taking up the bulk of your living expenses. Some of the categories that you might group the costs into include:

- Mortgage / Rent

- Council Tax

- Utility bills (electricity, gas, water, etc)

- Groceries

- Travel (train, bus, cost of running a car)

- Clothes

- Entertainment

Step 2: Evaluate whether you can get the same for less:

Sometimes we don't need to cut out activity to reduce our costs. It may be sufficient to find the same

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