Friday, March 11, 2016

Four Small Changes to Make In Order to Save Big

The holidays are well passed, but they’ve left quite a mark on many our finances. And they were followed by New Year’s resolutions, in which many of us resolved to turn around our finances in the coming year.

No matter how many times you’ve failed and flopped in the financial department, I’m here to show you a few small changes you can make today, that will make a big impact on your finances long-term.

YOU NEED A BUDGET

The first step in taking control of your finances, is creating a budget. Start by evaluating your expenses from the previous month. This alone, will be absolutely eye-opening.

savings

As Dave Ramsey says, the purpose of a budget is to “tell your money where to go instead of wondering where it went.” Until you become proactive about your expenditures, you will continue to experience financial stress. 

Maybe you choose to limit your grocery bill each month, but also choose to start saving for a summer vacation. Having a budget isn’t all about sacrifice. It’s also about spending on and saving for those things that matter most to you. Hence, a budget.

START WITH WHAT YOU’VE GOT

One way to give yourself some wiggle room, is to take a look around you. Purge your house room by room and evaluate what can be sold. 

Sell big ticket items on Craigslist, trade in your gold and silver for cash, list household goods on eBay, have a yard sale, send your clothes in to Thredup, list your house for rent on Airbnb while you’re away.

You get the point. Selling what clutters your house, enables you to make money without spending a cent. 

The beauty of making money this way, is that it can be done in small nooks and crannies of time. You don’t have to take on a second job to get a little extra cash.

CUT LUXURY EXPENSES

If you’re serious about saving money, skim through your online banking statement. What are some expenses you could stand to skip, to save a little each week? Do the math, it adds up.

eliminate debt

If you spend $10 on lunch out every weekday, that is over $2,500 you could be saving each year. 

My definition of luxury expenses is those convenience purchases and services that could be done for less money or none at all, by expending a bit more energy. Eating out, coffee at Starbucks, manicures, movie tickets, lawn care. Skip the bookstore and go to the library. You get the point. 

My hope is not to deprive you of every delight in your life, but rather to help you decide where you can save and where you want to spend.

ELIMINATE DEBT

Don’t believe the lie. Debt is normal. It allows you to purchase items that you will quickly pay off, for minimal extra money. 

Debt kills a budget and will keep you from getting ahead. If you find yourself drowning in debt, making payments to simply keep all the plates spinning, take a minute to step back.

You must develop a plan to pay off your debt for starters. If you are not a fiscally responsible or knowledgeable person, get advice from someone who is. Humble yourself. 

The alternative is that you continue making payments for the rest of your life, on things you most likely will never end up owning.

Imagine you want to buy a new car, with a payment of $330. The one you have is still working, but it’s not as new as you’d like. Let’s say instead of getting yourself locked into another payment, you save that $330 each month for a year. By the end of 12 months, you will have saved $4,000. That’s $4,000 to put towards a new car, or to continue to save in order to purchase a vehicle with cash.

This is how millionaires function. They do not lease vehicles. They buy used vehicles, and save for their next one. Save for those things you want and need. Skip credit cards and their entangling interest.

Debt takes people down a rabbit hole, from which few emerge. You will be much lighter and financially stable if you eliminate as much debt as is possible and think twice before going into debt again.

CONCLUSION

I’m not only about painfully cutting expenses and sucking all the enjoyment out of life. I have found that by being proactive in these areas, I have lightened the financial load and given myself some extra wiggle room.

How about you? What is a small change you have made that has made a big impact on your finances?

1 comment:

  1. Nice post! Thank you for sharing. I'd like to hear more from you.

    ReplyDelete