While great passive income ideas will help bring in extra money each month, in combination of reducing expenses, will really set yourself up for success when it comes to your financial picture. Handling the household finances is a tough job, one that should not be left solely on you, as if you have a spouse or partner that you share expenses with, you both should be on the same page, additionally with a family member or friend that you trust can help as well to bounce ideas off. There are plenty of moves you can make to stay on top of your finances, it’s certainly not an easy job, otherwise everyone would be ahead and thriving with their hard-earned money, instead of being in debt and struggling to get by, living paycheck to paycheck.
Create a Budget
Holding down a successful budget, honestly, is no easy task, which is probably why two-thirds of the population go through the month without one. I guess my thoughts are, try it and see if it will help, because in this instance you may not want to follow the norm if they are behind on their finances. With every dollar that comes in, setting a budget to allocate funds between monthly bills, food, gas, spending, and savings, may help to keep you on track for staying within your spending limits. It may take some tweaking along the way, but it could free up extra money.
If you haven’t tracked your spending in the past, now is as good of time to start. By taking last month’s debit or credit card statement you can go line by line to see every single person you made. From there, you can work on reducing by putting your charges in necessary vs. unnecessary columns and hopefully by calling out the unnecessary charges you can hope to not repeat prior spending. On some of the “necessary charges” you can try and either cut back on or figure out if you still need altogether.
Make the Tough Cuts
Freeing up extra money by reducing expenses is no easy task, especially when you get used to certain luxuries that you’re accustomed to, they may be tough cuts. Taking going out to eat for example, if you’re not used to cooking yourself, you will be surprised by going grocery shopping and preparing meals for yourself, how much you can save by skipping getting carryout or going out to eat. Beyond that, take a look at maybe cutting your cable bill and opting for a streaming service. It may not be as hard as you think to get rid of it.
Give Yourself a Cushion
You can be plugging along, keeping up with your finances and staying ahead, until your washing machine breaks, you have to take your dog in for surgery, or even worse, you lose your job and will need funds to cover until you find a new one. By saving up a few months’ worth of expenses into an account, you can give yourself a much-needed cushion so you don’t have to put unexpected charges on a credit card and put you behind by trying to make monthly payments, with interest, until can finally rid yourself the debt balance.
Don’t Miss Out on Free Money
While you do have to be careful with credit cards to ensure that you can pay the full statement balance by the due date, otherwise you will get hit with interest, of which could be sky high based on the card. Provided you can keep spending until control, by making the purchases you were going to be making anyways, you can get a rewards credit card that you can earn points or cashback, missing out on free money otherwise if using another card or debit. At work, you should check to ensure you are not missing out on any company-matching 401k contributions, that can significantly add to your nest egg, growing over time. Let’s say your company will match up to 6% and you’re only contributing 3%, that is 3% of free money that you’re missing out on. By contributing the full max of their matching, you can continue to increase a percent a year until you max out what you can contribute each year.
Stick with It
No one ever said that staying on top of your finances is easy, but if you stick with it, continue to monitor spending, reducing expenses, while contributing to savings, both emergency and retirement, you will better off now and for the future, when you finally decide to walk away from work.