January has rolled around again and we’re all changed humans — we’re waking up early to make ourselves green tea before work, making time for the extra twenty minutes on the elliptical, and making an effort to see old friends that we’ve been out of touch with. The thing is, all these expenses add up. How can we actually make a change in 2019 and start working toward our savings goals?
Evaluate Your Spending Habits And Earning Potential
Take into consideration how much money your spending. When you sit down and physically mark out what you’re spending on groceries, rent, utilities, you realize how it adds up. Then you have to add those $6 chai tea lattes from your favorite coffee shop, that yoga membership you use every once and a while that costs $120 a month, the number of bottles of wine you have a month, and your shopping expenses from your Nordstrom date with your girlfriends a few weeks back. Figure out how much you’re making, what you are willing to spend each month, and how much you’d like to be savings.
Anything you can cut out?
Maybe you really don’t need a $200 gym membership or you can do without those new heels you’re only going to wear once. Figure out what is really important for you to splurge on and then see if you can make a few sacrifices on things that aren’t as important to you. Even finding $100 a month that you can add to a mutual fund or savings account will make a world of difference in the long run.
Make Your Goals Realistic and Actionable
Create an action plan for yourself that is actually reasonable for your situation. It’s okay to make bigger goals for yourself, but you want to have smaller goals along the way that act as stepping stones. If you say you only have $5,000 in your bank account and you want to be at $15,000 by the end of the year, that’s great…. but you need to give yourself smaller more manageable goals that allow you to reach your greater accomplishments. If you say “I want to save $10,000 this year”, break it up for yourself and say “I will save $833.33 a month (two chunks of $416.66 if you’re paid bi-weekly or roughly $27 a day).” Once you know what you need to save per month, break it down for yourself even more. You can set up an auto deposit to have the funds automatically transferred. You can take your check to the bank and have them put the money right into your savings account. Giving yourself smaller stepping stones will make it feel like you’re reaching a goal each month which is rewarding and will continue to encourage you to reach your goals in the following months.
Get Your Debt Under Control + Understand Why It Happened In The First Place
Credit card debt, student loans, car loans, and mortgages all all up. If you don’t get it under control, it can be difficult to get it under your belt and pay off your debt. Figure out what you owe and make a list for yourself of all your debt, from the least amount owed to the greatest. Hypothetically you owe $35 on your Target Credit Card, $827 on your Visa card, $6,300 towards your car, and $39,000 towards your student loans. The method that makes most sense to us is paying off the lowest amount of debt to the highest. Make your minimum monthly payments across the board so you don’t add fines to your debt. Then, pay off your lowest balance (in our example your Target credit card) while still making your minimum monthly payments. Next, tackle your Visa card and pay off that balance. Finally your car loan and student loan. By doing this, you’re slowly eliminating the amount of debtors you’re dealing with and you’re focused on. Another way to approach it would be paying off your debt that accumulates the highest interest rate. If you have credit card debt on three different cards, you’re going to want to tackle the card with the highest interest rate first.
Now that you have a game plan for paying off your debt, evaluate why you have the debt in the first place. Things like car loans and student loans make sense — but maybe you bought a car that was way out of your budget or you don’t know how to stop ordering things on Amazon prime. Those things add up. Figure out where the debt came from and see if you can make it a habit to eliminate the problem. Buy too much stuff at Steve Madden when it goes on sale? Remove them from your email list so you don’t know when the sale is going on or when the new styles have arrived. Are you a Nordstrom Rack junkie? Turn off the notifications on your phone that tell you when new items have arrived.
Communicate With The People Closest To You
Let your significant other know your spending goals. Fill your very best friend in on why you’re wanting to save money. When the people closest to you are aware that you’re trying to make a change for the better, they will (hopefully) support your decision making and understand when you say you’re trying to cut back. Lunch at the amazing restaurant on the water sounds amazing, but maybe your favorite place a few miles away that costs $30 less a meal is a smarter idea. We think they’ll understand!
Are you wasting anything?
Perishable items and disposable items are money suckers. If you are using tons of paper towels for example instead of rags, you’re spending $7 a month on replenishing them. Make the switch and save yourself some cash. Same thing with the grocery store. If you notice yourself throwing food away at the end of the week, limit overspending by cutting down the quantity of food you’re buying. Grab a basket instead of a shopping cart. Pay attention to prices.
Coupon and Sale Induced Spending
We all do it. Things go on sale and you feel the urge to buy them. This is a tactic to get you to spend more money and I hate to say it…. it works. If you’re buying things you don’t need or haven’t been really wanting just because they’re on sale, you don’t really need them.
Most credit cards have apps now and you can actually use these apps to set spending limits for yourself where it will tell you if you’ve exceeded the monthly spending limit you set for yourself. You can also see how you credit score is impacted on many. Use these tools to your advantage to stay on top of your finances and set limits.