The first thing people usually say to me is that personal finance and budgeting is so complicated and hard to understand. I get why they say that. The way it’s usually explained can make your head spin. But once it’s broken down, you’ll see that it’s actually very simple.

Now don’t get me wrong. I’m not saying it’s easy. No, it can actually be hard at times. But it’s not complicated. What’s the difference? Well, let me explain.

When it comes to paying off debt and building up your savings you really only have 3 options:

  1. Increase your income.
  2. Decrease your expenses.
  3. Do both.

See what I mean? It’s actually really simple!

Of course, making any of these happen is where it gets a bit harder.

Increasing income sounds great, but if it was easy, wouldn’t we all have done it already? Still, there are plenty of ways you can increase your income in big and small ways and they all add up. Anything from taking on a second or third job to babysitting once a week or doing a few jobs on fivrr.com or taskrabbit.com are all options. You could get a raise at work or sell some unused clutter around the house. However you do it, the idea is still simple: bring in more money.

Decreases expenses can also be done in all sorts of ways. You can cook more and eat out less, get a cheaper cell phone bill, cut cable, or make homemade holiday gifts. You could sell your car and bike instead, cancel that trip you were going to take next year, or move to a smaller apartment/condo/house. However you do it, the idea is still simple: spend less.

Of course, you make the most progress if you do both of these. Bring in some more income and cut back on expenses a bit and watch the savings grow! Sure, earning an extra $50 each month doesn’t feel like much, but that’s $600 per year! Cutting out $100 in coffees, sandwiches, and ebooks feels like a sacrifice, but that’s $1200 per year that you can use for something else! If you do both, now you have an extra $1800! What will you do with that money? You could spend it on some of the things you cut out of your spending, you could buy a new bike, you could pay off a credit card, you could buy a plane ticket to a place you’ve always wanted to visit…. there are so many possibilities!

And it all starts with those three options: earn more, spend less, or do both.

Do you want help spending less? Enter your email address and I’ll send you a downloadable/printable list of 5 simple ways to stop overspending.

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