Money management in this day and age can feel daunting; expenses keep piling up and it’s hard to keep track of where your money is going. You might be looking to build an emergency fund, save for a big purchase, invest that money, or plan for that vacation. Here are some practical tips:
- Tracking Spending: This should be obvious, but many people often stick their heads in the sand: they don’t keep track of their spending. While inflation and the cost of living is rising, people still blow their money on Uber Eats and Door Dash. You could save by simply brown-bagging your lunch for work. The first step in managing your finances is to understand where your money is going. Start by tracking your expenses for a month. You COULD use an Excel spreadsheet to help you with this, or keep track of your spending of through an app.
- Create a Budget: Again, this one should be obvious as well, but many people tend to put this off. Once you have a clear picture of your spending habits, create a realistic budget to allocate your income towards essential expenses, savings, and “fun” money. This is more difficult in this era of inflation, but keeping track of your spending (along with any “side hustle” money) will help you keep track of your spending.
- Cut Unnecessary Expenses: Think of it as saving for some high-quality ticket item that you REALLY want: it might be a trip, a home, etc. You get the picture. People who work in an office spend more money than those who work from home, but those costs can be (somewhat) mitigated by a) taking public transportation rather than your car (which you spend gas and maintenance for), and b) you can take the time out of your week to plan out your meals and brown bagging it for the week. You can also cut back on your expenses out with friends by eating beforehand and then having a coffee or desert with your buddies.
- Negotiate Bills and Expenses: You can call your bank to cut down your interest fees; don’t be afraid to call in and try to negotiate over the phone about having your bills cut down. Sometimes, you can threaten to go to a competitor to have your (internet/cable/tv) bills cut. They may offer you a temporary reduction to remain with their company. This may be a small victory, but it’s a victory, nonetheless.
- Automate Your Savings: You can automate your savings. Set up automated transfers from your checking account to your savings account. Keep enough in your checking account to cover your bills.
- Explore Alternative Income Streams: Everyone needs a side hustle nowadays. You can find opportunities through freelancing, driving for Uber, selling unused items, or any other unique side hustle based on your skills or hobbies. If you’re lucky, you can monetize your hobby.
- Review and Adjust Regularly: Your financial situation and priorities may change over time, so it’s essential to regularly review your budget and spending habits. This is a no-brainer.
- Stay Motivated: Staying motivated to save your money is like trying to lose weight; it’s a continuous journey and one that requires discipline. Keep your goal in mind.
- Create a Living Will: In the quest to master your finances, an often overlooked but crucial aspect is estate planning or creating a living will. While the thought of planning for one’s own passing or incapacitation can seem distant or uncomfortable, it’s an integral step in ensuring your hard-earned money and assets are distributed according to your wishes, and not left to be decided by courts. This proactive step can save your loved ones considerable time, money, and stress in an already difficult time. Just as you track spending and create a budget to manage your current financial situation, consider estate planning as a strategic move to manage your finances beyond your lifetime, ensuring your legacy and financial intentions are honored.
Using these strategies to reduce your expenses can help you save your money for your bigger goals. You can take control of your financial situation and make meaningful progress towards your goals.