If there is one thing I would like to teach you, it’s how to save properly and effectively. Money shouldn’t be a life goal, but it is a necessary evil.
How can you trim your expenses if you don’t know where your money is going? My advice, go back three months and add up your expenses.
Create categories for each item. Housing, utilities, transportation, insurance, debt, food, etc. Those are your necessary expenses.
Then create a category for “fun”. Eating out, going out with friends, etc.
Figure out where all your money is going and how much is going to each category. Trim where you can.
Spending plan (aka budget)
List all of your necessary expenses, and add them up. List your monthly income. Compare those two totals and see how you finish the month. Do you have money left over, or are you negative?
The answer to this question will dictate what you do next. Regardless, the goal of this article is to teach you how to save money, so I’d advise you to trim expenses where you can.
I view every expense as a planned expense. Typically, planned expenses are things that come up on a regular basis. This month, you have a list of things you have to pay. Next month, the majority of those will have to get paid again.
I refer to all expenses as planned because to an extent, we can anticipate having to pay for certain things. Whether it’s next month or next decade.
Eventually, our car is going to break down, the water heater will rust out, and/or our roof will need replacing.
All of these things will happen, it’s just a matter of when. To relieve yourself of the financial burden this could cause, save early! If you figure a new roof will cost $10,000 and you have 15 years until that needs to happen, save now and save often.
I linked to it last week, but I feel compelled to do it again. When it comes to holiday spending, you need to save throughout the year. *Another “planned” expense.
You know it’s coming, don’t let it surprise you. Here’s the 52-week savings challenge I was talking about. Start early and save small amounts regularly.
Another neat challenge you can take part in is a no spend week/month. Obviously, the necessary expenses that have to be paid don’t count, but I’d highly recommend giving it a try. We buy for convenience, not necessity.
I’m talking about apps, programs, and good old fashioned automation.
Some other go-to’s include coupon apps like Coupons.com or Rakuten. I’d also recommend browser extensions to assist with online shopping. I personally use, RetailMeNot, but Honey is another popular one.
Automation – I need to spend some time here because I am a huge advocate for automating your finances. It makes too much sense to not automate. The only time, I wouldn’t recommend it is if your income is variable.
Even then, however, I’d only not recommend it for a few months until you have built up enough reserves. Then, with enough cushion, automation shouldn’t be a problem.
Things to automate – bill pay, savings, and debt repayment.