Every year you probably make a resolution to save more money and waste less money in the new year. For most people this is fairly easy to do but if you do not know where to start you will not be able to identify how to best go about it. We have assembled this list of five simple things you can do to make a dent in your budget and put more away for that future nest egg.
- Quickly audit your spending from the last year. This is not as hard as it sounds. Just get out your bank statements and credit card statements and use a highlighter and highlight unnecessary purchases from the previous year. Do you see some trends? Are you spending too much money on going out or on fast food? How about your grocery budget? Are you way over what you would like to spend? Use this information to cut back on non-essential things that you are buying but do not really want to buy.
- Change Charge Cards and Refinance if it make sense. If you are paying high interest rates you can usually move the debt you have to a lower rate card or refinance a higher interest rate loan. A few hours of work could save you hundreds or thousands over the life of the debt.
- Monthly Service – what are you using and what are you overpaying for? Everyone needs utilities, some entertainment, mobile phones, transportation, etc. However, many of these services are simply paid each month without shopping around or looking at the plan you have. Do you need full cable? Maybe you only need Netflix? It depends on what you value, but taking a hard look at these monthly expenses can save you a lot of money. Even utilities sometimes can be shopped around and rates can be reduced for a limited time, sometimes saving more than 50% versus not doing anything at all and just paying the bill.
- Meals – eat less and/or cook more. If you are not your ideal weight, why not just try to lower your portions at every meal. Don’t think of it as a diet, think of it as trying to shave 20% off your food bill so you can save some money. Split meals with someone else at restaurants or take half home and make it two meals instead of one. Think about what you spend in a month on food and imagine trimming it by 20% or more. This can also be done by cooking more and eating out less. If you eat out several times a week, set a maximum number and once you have gone out that many times, you have to cook in every other meal. Try learning some healthy meals you can make for under $5 as well and you will be really raking in the savings.
- Necessities – Gourmet coffee, wine, organic? It is easy to fall into a trap of thinking you need the best gourmet coffee, or red wine every day, or only organic fruits and vegetables. If you do some research, you can find that some over the counter coffee is very good, and there are nice red wines for under $10 a bottle if you know where to look, and many organic items have no added benefit (especially if they are peeled.) Spend money where you really need to but do not fall into a trap of always needing everything at the highest end when there are good alternatives.
In addition to these things, look at a spending threshold per item and set a waiting time period before you can buy anything over that limit. It could be $50 or it could be $500 depending on what your spending habits are and what you can afford reasonably.
As an example, if you see you often buy things on impulse over $50 then you say, I will not buy something over $50 unless I wait for at least 7 days before making the purchase. If after 7 days I still really want it, I will then buy it. This will stop impulse buys where you might often regret the purchase after you realize it was not something you would use. A good example of this is kitchen gadgets, jewelry, shoes, tools, tech gadgets, etc.