Spring is the perfect season to turn over a new leaf. There’s something about good weather that makes you want to make better decisions. One of the best decisions you can make this year is to examine and correct your budget. Spring cleaning can start at home, but make sure it doesn’t end there. Spring clean your budget in three easy steps with these great tips and tricks.
Step 1: Track your expenses
Before you can discover which expenses to cut back on, you need to find out where you’re spending your money. Track your expenses for a month. Start with your biggest costs. These include rent or maintenance, utilities, debt, insurance premiums, credit card bills, groceries, and gas. Then, move on to entertainment and lifestyle expenses. These are things like cable, eating out, shopping, and memberships like Netflix or the gym. Try to include everything you spend money on – even that daily takeout coffee you get without thinking. It all adds up.
Step 2: Create a reasonable budget
Once you know where you’re spending your hard-earned money, it’s time to create a budget. The goal is to spend less than you earn, so you can save a little money every month. Be reasonable. It’s tempting to create a very strict budget, especially when you’re starting out. The 50-30-20 rule is an easy way to organize your budget. Save 50% of your for necessary expenses. Set aside 30% for things you want or enjoy, but don’t need. Put the remaining 20% straight into savings. A handy tip to make sure you save every month or week is to pay yourself first. Before you spend anything, put away that 20% in your savings account. Then, spend on necessities. Lastly, you can use what’s left over for other less urgent expenses.
Step 3: Cut out unnecessary expenses
Now that you have your budget in place, time to make it even better. Here are ten clever ways to cut out all your extra expenses.
- Reduce your rent expenses or refinance your mortgage
Rent is one of the biggest living expenses. Unless you own your home outright, it’s not an expense you can avoid. Still, it may be possible to pay less rent than you do now. Could you move to a cheaper area? Maybe get a roommate to share expenses? Could you sublet? Where there’s a will, there’s a way. If you already own your home and have to pay a mortgage, check if you can refinance your mortgage. You could negotiate for a better deal with lower interest rates or choose a different lender.
- Use your utilities wisely
It’s surprising just how much you can save by being mindful about how you use electricity. Even little actions like switching to LED bulbs, turning off unneeded lights, and unplugging unused electronic devices can go a long way in cutting down on utility bills. Get a thermostat you can program. You can adjust the heat and cooling to match when you will be at home, so you don’t waste energy.
- Curtail your travel expenses
Do you usually drive your car to work? Check if you can carpool with others instead. This will save you a pretty packet in fuel expenses. Choose to use public transport whenever possible. Walking or riding a bike to get around is also a great option. It allows you to get some exercise, save money, and is better for the environment too. Just make sure you wear comfortable shoes or a helmet!
- Get rid of rarely used subscriptions
Cancel any subscriptions to apps, magazines, and streaming services that you don’t use.. So often we sign up for services and forget they’re charging us a monthly fee. Or we’re reminded when we see a billing notification, but we can’t be bothered to unsubscribe at that given moment. Even those small fees add up quickly. Take the time to cancel them today. For motivation, think of using the funds for something you really want.
- Check your cell phone plan
Your cell phone plan may include features you don’t use. There may also be hidden charges your provider will waive off if you ask. Some providers may offer cheaper plans or customized plans that they don’t advertise. You can also check your cell phone bill to see what you’re spending on most. Are there data charges you can avoid by using Wi-Fi? Maybe calls that you could use an app for instead? That’s savings right there.
- Cancel your cable
We live in the age of streaming platforms. Unless cable is your sole source of entertainment, it may be wise to cancel your subscription. You never know, cancelling your cable may be just what you need to get back to your hobbies or develop a reading habit.
- Go grocery shopping with a plan
Shopping is an artform. If done right, you can save quite a bit every single month. You just need to set and follow a few rules. If you’re going grocery shopping, always make a list. Most supermarkets are designed so you buy more items. Stick to your list and buy only what you need. Another trick that works is making sure to shop on a full stomach. Hunger often leads to impulse purchases. Scan for coupons and cashback deals to save on every purchase. A penny saved is a penny earned!
- Become a smarter shopper overall
Speaking of impulse shopping, use the 24-hour rule. If you see something you want (but don’t really need), wait 24 hours. Buy it only if you still want it the next day. It’s amazing how many things lose their charm even after a short while. It will also help you appreciate the things you do end up buying. One more trick to stop buying unnecessary stuff is the one-in, one-out rule. If you buy something that you want but don’t need, you also have to get rid of something similar. For example, if you buy a jacket you don’t really need, you have to give away (or get rid of) a jacket you already own. This acts as a superb hurdle for impulse shopping and helps clear out clutter too.
- Fix your financial spending
You may be spending more than you must on financial products and services. Start with your bank. Are you paying high fees for their services when you could get them for free? Switch to a bank that offers no-fee bank accounts. You could save as much as $360 a year. Next on the list should be insurance and debt. While you need to have insurance for your home or car, you may be able to get one with cheaper premiums. If you use your credit card often, cut back and switch to paying by cash. Use your credit card wisely and pay your bills on time to avoid paying late payment charges. In fact, you should make sure to pay every bill by or before the due date and prevent late payment penalties. Check if you can get a loan with lower interest rates to pay off or refinance any existing high-interest loans and other debt. If you can afford to (and if you won’t be heavily charged for it), check if you can pay off your debt before it’s due, so you pay less interest. All of these tips may require some research, but it’s worth the money you will save in the long run.
- Have fun for free
Many of the activities we enjoy tend to come with a price tag. However, having a good time doesn’t have to be expensive. Replace going out for dinner with a hearty home-cooked meal. Instead of takeout, take the time to plan and prep your food for the week. This helps to buy only what you need at the supermarket and is healthier too. Organize a movie night, games night, or get-together (even if it’s virtual right now) at home. Make the most of spring and picnic in a nearby park or go for a hike. Visit your local library, museum, or revisit an inexpensive hobby. Learn something new off the internet. Spend time spring cleaning, gardening, or exploring your neighborhood. There are many ways to have fun without spending a dime. Seek and you will find them.
Bonus Step: Set Savings Goals
Cutting down on expenses may seem difficult at first. Especially when it means having to go without certain luxuries or things you enjoy. Keep at it, and soon spending wisely will become second nature. Remember to treat yourself occasionally. You can even plan your treats, so you don’t splurge accidentally. A great way to stay motivated on your journey is to set savings goals. These goals could be a particular amount you want to save or something expensive you want to buy or do. Saving for a specific target rather than a vague ‘rainy day’ emergency makes cutting back on expenses much easier. Every time you are tempted to spend, you can remind yourself about your goal. As you get closer to your target amount, it will be even easier to stick to your budget. Good luck!