Concentrate on the Big Three

In backpacking a common piece of advice to those who want to reduce their pack weight is to reduce the weight of their big three first.  The big three consists of  a backpack, sleeping bag, and shelter.  These are usually the three heaviest items one carries.  It makes sense to concentrate on reducing the weight of these first since this is where the greatest progress can be made.  It doesn’t make much sense to be drilling holes in your toothbrush when you’re carrying a backpack that is twice the weight you need.

The same concept can apply to personal finance.  There isn’t much point in washing out your plastic baggies and re-using them and then driving a luxury SUV that you can barely afford.  You need to identify what your big three are and then see what you can do to reduce them.  Most people would have housing and transportation as two of their largest expenses.  Taxes would probably also be in most people’s three biggest expenses but since you’re limited in how much you can reduce those you might want to concentrate on the next biggest expense. If you keep track of your expenses, which you should, then it will not be a problem to identify your largest expenses.

The old saying penny wise and pound foolish defines what this advice is meant to fix.  Of course once you are pound wise it is good to be penny wise as well.