Cutting coupons isn’t the only way to save money. Proper spending and budgeting habits can help keep your bank account cushioned. Try these suggestions to better your financial situation and save money for the things that matter most – like traveling!
Know Your Income and Expenses
Tallying your income should be a pretty simple process—just add up your paystubs to see how much money you’re bringing home every month. It’ll be a little bit harder for freelancers, investors, independent contractors, and small business owners because your monthly income can vary. In these instances, try to establish an average baseline. Be sure to calculate taxes and deductions when coming up with your number. Once you know your income, you can compare it to your basic list of expenses: rent, bills, groceries, student loans, etc. These are your mandatory fixed expenses, not pleasures such as shopping or dining out. The most important rule is to spend less than you earn. If comparing these numbers side by side places you in the red, see what bills you can cut or where you can reduce your utilities.
Define Your Goals
Take a look at your life and determine what you want. It could be a new car, a European vacation, braces for your kid, a larger house, or getting out of debt. What are you working on, and how much do you need to contribute each month? If you don’t know where to start, begin with creating an emergency savings fund. Establishing your goals will help motivate you to spend your money smarter, and keeping them in mind might deter you from buying that overpriced hand bag.
Automate Your Savings
A good way to reach your goals faster is to automate your savings. To get started, you can automatically direct a percentage of your income into your emergency fund, short-term goals, or long-term goals. Automation works because it takes the hassle out of saving and does the hard work for you. Consider using free companies such as Qapital who help you save money just by doing the things you do. By linking your debit card and setting rules like rounding up, you’ll effortlessly see your savings account grow.
Create a Budget
Budgeting shouldn’t be a goal—it should be the tool that helps you achieve your other goals. Setting and sticking to a budget might seem daunting, but they’re easy to make. Take your income and subtract your savings portion and fixed expenses. Also deduct non-monthly expenses like insurance premiums, haircuts, and holiday gifts. The rest is yours to spend as you please. Divide it by four and you have your magic number—how much you can spend weekly on lattes, movie tickets, and the like. To keep track of your spending, employ the help of Mint or another company who will give you visual graphics to show you where your money is going.
Use Your Resources
The internet is a great tool for financial success. Ditch those newspaper clippings browse online retailers to receive discounts for online purchases. Research the best bank accounts to earn more interest and credit cards that give you the most cash back. Sign up for every free customer rewards program possible. The internet also allows you to scour multiple sites for price comparisons and can help you figure out which grocery store is best to shop at given the items you buy most frequently. Last minute booking sites like Travelocity.com will save you a lot on travel expenses, while a promo code for The Bay can help you save on home goods. There’s truly an online deal for everything you can imagine, so do your research.
Practice Smart Habits
A few simple behaviors can contribute to wiser spending. For example, to avoid instant gratification, master the 30-day rule and hold off on any big purchases to see if your urge has passed after a month. Turn off the television to reduce your electricity bill, limit your exposure to ads, and maybe even free up some time for a side hustle. When you’re heading to the store, go equipped with a list of items that you need—and stick to it. Staying in versus going out, or making gifts instead of buying them, are also wise spending choices.
Make personal finances a priority and adopt these practices to spend more wisely. It might seem stressful now, but you’ll thank yourself later.
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