So here we are in a brand new decade. Are our old financial habits still serving us? Here are five ways we can spend less, save more, and live better.
Save it for a Rainy Day
Life happens. Sock some money away for unexpected events like car trouble, a dead refrigerator, or your child’s emergency room visit. I use Dave Ramsey’s advice on how much to set aside, but you may want to save more.
Goals are Good
We set S.M.A.R.T. goals for work, why not for our money? It’s good to have three: a long term goal for which it will take years to save like retirement (you may want to research IRA’s ), a medium term goal like a four week vacation driving the length of Route 66 (which could take a couple of years of saving), and a short term goal like purchasing a new laptop (which may only take a couple of months). It may be a good idea to arrange to have a percentage of our paychecks directly deposited to our savings accounts. We’re less tempted to spend money that’s a bit inaccessible. If we received a Christmas bonus, we should consider saving it toward our long or medium term goals. We won’t miss money we weren’t counting on.
Take a Picture, It Lasts Longer
Let’s get a snapshot of what our finances currently look like. Gather records like statements for investments, checking and savings accounts, and credit cards from last month. Where is all the money going? There are fixed expenses like the mortgage (or rent), loans (e.g., car, student), and utilities (e.g., gas, electricity) we have to pay every month. But to reach our savings goals, we may need to cut back on non-essentials. For example, do we use a food delivery service (Uber Eats, Grubhub, etc) a lot? Maybe it’s time to start cooking and food prepping instead. If we have debt that charges high interest (typically credit cards) we can use the money we save from not spending it on non-essentials and pay off the high-interest debt as fast as we can to save on finance charges.
I’m on the Hunt, I’m After You
Shopping online saves time, but when I’m trying to save money and the sweater I decided not to purchase keeps following me around from website to website as I check my social media (creepy, isn’t it?) begging me to buy it, it’s really hard to resist. So, I get offline and promise myself I won’t purchase the sweater (or whatever) until 48 hours have passed. If I can live without it for two days, I can probably live without it period.
Just do it
We shouldn’t wait to begin saving until we think we can afford to put some money aside. It’s likely that day will never come. Begin saving money immediately; even if it’s just $20 a week in a savings account. By the end of a year, we’ll have $1040, a nice emergency fund.
Have you updated your savings plan for 2020? Please share it in the comments section below.