Change spending habits
Budgeting is about learning and making adjustments in order to create better spending habits that help you get where you want to be. After you look over how you're spending money and compare it to your goals, make the adjustments you need to help you meet your aspirations. Watch the Changing Spending Habits video to get information to make adjustments to your budget.
A weekly allowance is a great way to treat yourself while getting disciplined over your new budget. Consistency is key. Once you land on a budget that works, stick to it. And, if you overspend one week, don't overcompensate the following week. Just stay with your plan. Here are a few more ideas to help you stay on track.
No spend days
How many days in a month can you turn into no spend days? Keeping track of your progress can help you see how well you’re doing and keep you motivated. There are certainly days when not spending isn’t an option and that’s okay.
Set a weekly budget — starting on Monday
When the money you allotted for the week is gone, you’re done spending for the week. This can help you be more selective during the week when choosing to spend at events, for meals out or a quick coffee — you name it. Especially if you’re likely to spend more when the weekend comes, it can be helpful to get an idea of how much you will have left over throughout the week.
Cash only night out
Night on the town? Street fest? Weekend away? Only bring the cash you allot for the occasion. Dodge the surprise (or impulse) purchases.
Pool vs. solo-ridesharing
Create a spending plan
Start by making a spending plan before you get the money
Whether you want to spend it all, save it all or something in between, make sure it's on purpose. Having a plan in place for the money before it's in your account can help you resist the urge to spend it before you have it, or overspend. Money can disappear fast, especially when you're not keeping track of where and when it's being spent.
Align with your priorities
Making decisions about your money should feel good! You should align your money with your priorities. Maybe that means a combination of saving and splurging, or maybe you pay down a debt. The point is, you decide how to use that money to meet your goals and make progress in the direction you've determined.
Build up savings
Get a jump start on saving and planning for your future. Here are just a few options to think about when it comes to your savings plan:
- First, consider different savings buckets.
- Beef up your emergency fund to help protect your budget from the unexpected, like car or home repair. Calculate how much you need.
- Consider options for saving for your retirement through your employer (typically a 401k) or on your own (an IRA). Already saving? Think about bumping up your contributions.
- Put extra money in your Health Savings Account (HSA) if you are anticipating any upcoming medical bills.
Focus on your debt repayment
Make a list of all your debts, their interest rates and the remaining balances. Then, prioritize your payoff strategy, either focusing on your highest interest rate or lowest balance first. When you pay off one debt, roll the amount you were paying in to the next one.
Invest in yourself
Interested in starting a side gig or pursuing a new business opportunity? You can invest in your future by upgrading your laptop, taking that accelerated skill course or getting new headshots. Enjoy your hard earned money by making a plan you feel good about. While most prudent savers balance spending and saving, remember it's all about putting your money toward what's most important to you.
Additional tips on how to save money
- Plan your grocery shopping. If you plan in advance the list of grocery items you need, it might save you from buying things you don't need. Look at coupons, deals and loyalty programs that might also help you in your goal of saving money.
- Look at your subscriptions. Many times you might have signed up for magazines, streaming or music services or "fun boxes" that might not be relevant for you anymore. Decide if any of those services may be cancelled and continue adding to your savings.
- Watch your utility bills. When you make changes to lower the use of water, gas or electricity, it will more likely show some savings on your bills.
Check out these other effortless ways to save money.
Your chapter 5 checklist:
- Watch the Changing Spending Habits video.
- Download the Budgeting 101 Worksheet.
- Figure out an allowance amount that works for you.
Once your spending is in line, the next step is to organize and automate it.