I was at a dinner, and a Manager of a big company told everyone at the table.
"There is this manager, at the end of the dinner, asked his staff, the one who organised and paid for the dinner: Will you spend this kind of money if it was your own dinner and you had to pay for it?"
I am sure most of us would gladly spend other people's money without any guilt or care, especially if it is your company's money. And some might justify by saying "Oh, I have worked so hard but I am just drawing a meagre salary. Consider this a little payback to me, what's wrong with it?"
Anyway, back to the question, would you spend your own money that way?
The title of this post is Run Your Personal Finance Like A Business.
Of course, I am talking about a responsible company. A company that always think of ways to lower its production cost. A company that won't spend unnecessarily more than it should have.
A company that has that manager mentioned above as their employee. He is a person who is always conscious of the spending. It is our personal financial matters. If we don't look after it, who will.
I was browsing at IKEA's website and read some of the wonderful stories of how the furniture designers came up with ideas to lower production cost.
Designer Maria Vinka lowered the company's production cost by using unwanted banana leaves and made it into a wonderful stackable rocking chair. Think about it, this chair was created out of waste product. Also, stackable chairs allow more of them to be shipped in one container, thus reducing shipping cost as well.
Designers Knut Hagberg and Marianne Hagberg also reduced shipping cost by creating a lightweight stackable children's stool.
Look around you to lower your cost
In this current economy situation, I have tried to do a few things to lower cost.
1. Don't buy it if you don't have space in your house for it. Sometimes we see things that we really like, but we just don't have space in our house to display it. Yes, I am talking about those cute little things that doesn't add value to our house.
2. Don't buy it if you don't need it. I was on a trip with a friend. We kept remind each other, this is a budget trip. We are here just to see the country and get to know the culture. Please remind me not to buy things that I don't need.
3. Don't buy it if it is of low quality and can't last long. That means, you probably have to replace it later and you will double your cost. Buy something that is more durable even if it might cost a little more.
4. Reuse if you can. Find ways to repair your old things and make it new again.
5. Don't buy it now if it's not urgent. You can always wait till when there is a good sale and bargain.
6. Don't buy it if it's not what you wanted. Sometimes we want only a certain type of thing or product of a certain brand. However, because we can't find that product, we buy another type or make. Later on, we find ourselves not being happy with that product and have that regret feeling. So, buy the things that you really want even if it is going to take you longer to find it.
7. If there are products that are cheaper and yet as durable as those branded ones, get the cheaper ones. For example, I have stopped buying branded t-shirts. I won't buy them anymore just simply because it has the brand name on the front. I would go for t-shirts that has no brand on the front or back. I will go for plain t-shirts that have good quality and way cheaper than branded ones.
8. I don't buy new things if I can. I will scout for used products. Find a good quality one, and also one that look as good as new. You have read that I bought a used car instead of a new one. It is following some of the philosophies and ideas above too. When you want to replace some of your car parts, see if you can buy them for used parts shops (half-cut "kereta potong" shop).
9. Be humble, always ask around for information. Or survey around first for the best place to buy and the best product to get. If it is a product that you have no knowledge on, always find out more information about it first. Make sure you are going to like it by talking to those who are already using that product. Be humble and talk to them. You will learn about the product more and whether it is worth the money spent.
10. There are times we just want to get a newer product to replace an old product that is still in good working condition. Sell off your old product once you get the new one. This is a common idea, we sell our car and buy a new car. We sell our house to buy a new house. So, why not sell of your old TV after you buy a new one. That means, buy those big ticket items (TV, washing machine, hi-fi, car, etc) of good brand name and that is popular. Buy those things that you can easily sell when you want to change them.
Only a business that has a lower overall cost than its earnings will be profitable. If you are able to lower your cost, you will have more money to invest and save.
Record your spending
Like a business that has an Accounts or Finance Department, you too must record all your spendings. Create a spreadsheet that tracks your income and spending. That will allow you a quick snapshot of how much you have and where you had spent the money.
When you track your cashflow, you will know when it is going to be tight in the coming months. You will know much earlier. You can even plan how to save for that vacation that you have been longing for.
Please share your ideas of lowering cost by leaving your comments.
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