Implement practical changes by tracking expenses, automating, and trimming reoccurring expenses.
1. You Need To Keep Track of Your Expenses
Whether you are manually keeping track using an excel spreadsheet, or using a budgeting app like Personal Capital, knowing where and how much money you are spending is the 1st step to gaining control of your finances.
Once you see your numbers on paper, metaphorically speaking, you may be in shock at your current spending habits!
Just this month, I spent $729 at restaurants! Maybe it’s my post-pandemic soft spot to support small businesses, but it’s too much nonetheless. Something about seeing those numbers on the screen just hits different!
2. Automate your savings
If you’re like me, the term “out of sight, out of mind” is a great concept when it comes to saving money. If your employer allows it, divide your paycheck so part of it goes directly into a savings account each pay cycle. Also, make sure the amount you have set aside is reasonable.
You don’t want to transfer 30% of your paycheck into your savings only to find yourself hitting that “Transfer To” button 2 weeks later, so you can pay your bills.
Not So Funny Story: When I had literally $0 in emergency savings just a few years ago, I decided the best way to save money and prevent myself from touching it was to make sure I couldn’t access the money via an app. (yes, like an app on your phone).
So, that’s how I ended up with Marcus as my primary savings account. Not because of their features or special sign-up bonus, but because they didn’t have an app when they first went live. Nonetheless, Marcus has an app now and I still use them.
3. Trim your Reoccurring Expenses
It’s hard to save money if you don’t have any extra money to save.
One of the easiest ways to reduce your expenses where you have the power to switch or negotiate with your providers.
I literally saved $78 a month by switching from T-Mobile to Mint Mobile & calling my internet service provider (Xfinity) to lower my monthly bill.
Quick Tip: In marketing, there is a concept called a sticky customer. A sticky customer is someone who is unlikely to change service providers because it’s too much of a hassle for them, so they’ll just continue using your services.
Internet customers are probably the stickiest of them all! Think about – who changes their internet provider on a regular basis or even ever? So, if you’ve been a customer of your internet provider for longer than 1 year, it’s highly likely that if you call them and tell them you are thinking about switching they’ll likely come back with a lower internet price if you for at least a year. (mine was 2 years!)
4. Avoid Lifestyle Creep
This is a huge one and often overlooked. The only way to save more is to spend less than you make. Simple in theory, right?
If you want to make saving easier, but you’re always spending that raise or bonus, then you’re back where you started. Although, maybe have you have a brand new iPhone or Gucci belt.
Yes, if you get a raise or bonus, I think you should allocate a portion of it so you can treat yourself to something special. However, when you make more “permanent” lifestyle changes, that’s when it becomes a problem (think anything that will require you to go on a payment plan)
For example, the biggest one for me has been rent. Despite increasing my salary by 50% over the past few years, I’ve managed to keep my rent costs fairly stable. Sure, my apartment isn’t fancy, but I make it look super high-end by furnishing it with accessories from West Elm.