Are you looking to overhaul your budget, but don’t have lots of wiggle room for savings? Even if your employment is solid right now, it doesn’t mean you’re not nervous about your cash flow. Your costs might have gone up or your hours might have been reduced (or both). Or maybe you’re just trying to build a savings safety net or to fortify one you had to dip into.
Whatever the reason, there are some easy tweaks you can make in your daily spending habits to boost your bank accounts without too much effort. These steps are easy and can add up to significant cash savings with little change to your daily life.
1. Take a Look at Your Fees
If you own a home, now is an excellent time to refinance. Rates are low and you can save a bundle of cash over the course of your loan period. You might be able to shave years off your mortgage—who can’t use that kind of extra money? And take a look at your car insurance or home insurance. Do some comparison shopping and see if you can find better rates for the same coverage. Don’t forget to check if your employer has any kind of discount program for insurance coverage.
2. Ditch the Extras
Like a leaky faucet, small cash drains can lead to financial problems. Where are the possible leaks in your budget plan? The monthly charge for Spotify. The magazine subscription that renews automatically. The phone plan that is out of step with what you need. The bank fee every month. The three streaming subscriptions you haven’t had time to watch lately. The gym membership that you aren’t using. The monthly fee for a service plan you meant to cancel last year. All those small leaks can add up to a big cash drain. Check your monthly expenses for at least one or two things you can cancel.
3. Find Your Perks
You’ve heard your friend talk about her credit card extras. How’s your credit card matching up? You don’t need (and really shouldn’t hang onto) a handful of credit cards, but you should make sure the ones you have are working for you. Perks like extra mileage, money back, or discounts on things you use frequently come with certain credit cards. If your credit is good and your credit card isn’t offering you some real benefits (and a low interest rate), ask for them to give you an upgrade or look for a new card.
4. Sell Your Stuff
Do you have clothes you don’t wear or lamps just taking up space in your closet? Why not sell them and make some cash? Online resale retailers like Poshmark or your local consignment shop are a boon to people who want to sell their gently used (but in good shape) clothes, jewelry, bags, shoes, and sometimes even household items. You’ll earn a percentage of the sale price and will probably never miss what you got rid of. And springtime inspires lots of people to clean out and have a big yard sale. Join forces with people in your neighborhood and make some extra money for things you no longer want.
Look for the leaks in your daily spending and you might be able to save hundreds of dollars over the course of the year.
The word “budget” doesn’t usually excite most people. In fact, many think of budgets as restrictive. Or they may think of spreadsheets, complicated equations or time consuming number crunching. The good news is that a good budget doesn’t have to involve any of those things. Well, a good budget may be a little restrictive – but only in the sense that you’ll only spend money you actually have and you’ll have a good idea of where your money is going.
If you’d rather relax during your time off than balance complicated personal accounts, keep reading for an easy, 3-step budget that will put you on the road to better financial health.
Total Your Bills
How much does your life cost each month? Take out a sheet of paper and list the regular bills you pay each month and the amounts (e.g. rent/mortgage, utilities, cable, phone, debt repayment, etc.). Then write down all of the irregular bills you pay quarterly or annually and the total amounts for each (e.g. car registration, car insurance, taxes, etc.). Now add both your regular and irregular bill totals together for a grand total and divide that total by the number of paychecks you receive each year. For instance, if you get paid once a month, divide your total by 12. This is the amount you need to set aside from each paycheck and deposit into your bills account (more information below).
Keep Things Separate
Now that you have a handle on the amount of your bills, the next step is to open separate bank accounts for all of your various needs. A good place to start is with three accounts: An operating account, a bills account and a savings account. Here’s the purpose of each account:
Bills: This is the account you’ll use to hold money for your regular and irregular bills that you totaled on a piece of paper (see, no spreadsheets required). Deposit this amount each pay day into this account so that you are confident that you’ll always have money to pay your rent, utilities, annual car registration, etc.
Savings: This is where you’ll save money for an emergency fund, travel or anything else that you need to set money aside for. You may choose to have more than one savings account to keep track of each goal separately.
Operating: Need cash from the ATM? It comes from this account. Buying concert tickets? Purchase them from this account. Basically funds in this account are free for you to spend because you’ve already allocated funds to cover your bills and any savings.
You can have your pay check direct deposited to your operating account and then simply transfer the amount you need to set aside into your bills account each pay period.
Be sure to shop around for banks that don’t charge fees for these various accounts. You want to utilize free checking and/or savings accounts so that money isn’t flying out the door each month in fee charges.
The remaining funds can be used at your discretion for groceries, entertainment, hobbies, etc.
Feel free to tailor this budget plan to fit your needs. You may want to include things like car repairs, gas and groceries as part of your bills account and save for them out of each paycheck. You can make this plan work for you and your budget. The most important things is that you are planning for each area of your life – the necessities and the fun stuff, and you that you have a pretty good handle on how much money each area costs.
Image credit: Stuart Miles/freedigitalphotos.net
Denene Brox is a Kansas City-based freelance writer. Visit her online at www.earnmorelivewell.blogspot.com.
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