Now that we are now a few weeks into the new year, if you haven’t started to take a look at your finances, now is a good time to start. Some have resolutions of losing unrealistic amounts of weight, so you join a gym, use it regularly for the first month or two and then the visits start to become less frequent, and pretty soon you are paying the monthly fee every time but you haven’t gone in months. In order to free up extra money, you can try a 52 week savings plan, but a good place to start would be to cut monthly expenses, and then with that extra money you can build an emergency fund and really focus on saving for retirement.
First Review All Expenses
You may think you have a pretty good idea of how much everything costs each month and what you’re spending, but it could surprise you once you lay it all out. If you can pull last month’s credit/debit card statement you can actually go line by line and see every dollar that is coming in, and more importantly, going out. You can separate the charges into monthly bills, gas, and then spending on food and entertainment. If you can look at some of the purchases that probably could have been avoided and add them up, you could be in for a shock to see what you could have left at the end of the month.
Get Rid of the Easy Ones First
As you are starting to go through your expenses and what to cut, try some of the easy ones first to get into a habit of your newfound frugal lifestyle. If you have any magazine subscriptions or newspaper deliver, that could be a good start. I know I would get the Sunday paper, but I was essentially paying for picking up the paper off the driveway and then putting directly into the recycle bin, so what exactly was I paying for?
Avoid Going Out to Eat
Now that the easy expenses to cut are out of the way, you may have to now make some tough choices and sacrifices, and that starts with going out to eat. Sure, it’s great to have someone cook, serve, and clean up after you, but that comes at a premium price. If you can go grocery shopping and avoid always going out for lunch and dinner, you can save hundreds of dollars each month right away. Even stopping for coffee every morning adds up over the course of the month, but you could brew at home and have it timed to be finished just as you are about to walk out the door for work.
Stay Away from Impulse Purchases
Whether it’s the items in the checkout aisle, or going to the grocery store without a list and getting more than you expected to get, the impulse purchases add up quickly. Have you ever gone grocery shopping on an empty stomach? You start to fill up the cart with unnecessary items pretty quickly, whatever looks good, inflating your spending budget, not to mention your waistline from the excess food that you probably would be staying away from otherwise. It may be tough, but it will be worth it in the end when you see the savings add up.
Cut the Cable Cord
Speaking of sacrifices, no one ever said getting ahead was easy, and that could be where getting rid of cable comes in next. It may be a shock or a life adjustment from what you’ve really been used to your entire life, but if you actually step back and think about how many channels you actually watch out of the hundreds you get, or which shows you are watching, you can make the argument that you can give up flipping around, only to find commercial after commercial, and opt for a streaming service for around $10 a month, get an HD antenna for an investment of around $20, and maybe you won’t miss cable after you see the savings add up.
Boost Your Credit Score
While you may not think right away that credit score could affect your monthly expenses, but think about the interest rate on your mortgage, personal loans, and credit cards. That is based off your credit score when you filled out the application, so any improvement in your score could mean lower interest rates if you refinance, take out a new loan to pay off the existing, or a credit card with better APR percentage, as well as having cashback rewards.