The internet is crawling with articles with titles like, “16 Things You Can Do to Save $500 This Week” and “8 Little Tricks That Will Save You Money.” You might pick up a cool tip or two, but chances are you’re not going to fund a down payment on a house or buy a new set of wheels by reusing your Greek yogurt containers and cleaning your mirrors with vinegar instead of Windex.
There is no way to fast track your way to wealth; it takes discipline, patience and time. But there are a few little things you can do to get your spending under control, pay down debt and build up savings.
Keep Track of Your Spending
There are tons of apps out there to help you manage your money, like Mint, LearnVest and Mvelope. They can help you get a handle on your day-to-day spending, as well as help you visualize long term goals. But there are other options too. Maybe you’re more of a spreadsheet kind of guy. A quick Google search will produce easy-to-use Excel templates to help you manage your budget, travel expenses or even your children’s expenses.
Set Short Term and Long Term Goals
Take a moment and think about what you want to achieve in the next year, three years, five years or 10 years. It’s likely that your finances will be involved in these goals. If you determine the cost of achieving your goal, you’ll be able to better plan how much you need to save and the timeframe you’ll need to allow yourself. Don’t forget to prioritize your goals and think about what you really need to do versus what you might really want to do. The acronym SMART can help you with ranking your goals: S: Specific M: Measureable A: Attainable R: Relevant T: Time-bound.
Analyze Your Spending
Pull up your app or open your spreadsheet and take a look at where you’re actually spending your money. While you’re analyzing your spending, ask yourself these two key questions:
1. Is my spending necessary or discretionary?
If the spending is for a need, first determine if it’s actually a need, or if it’s really a want. Decide if you have to purchase a specific type or brand of the need and if you need to have it now or if it can wait.
If you determine the spending to be discretionary, ask yourself if it’s truly affordable and if the satisfaction is worth the cost. Keep your goals in mind. In-the-moment satisfaction can prevent you from achieving your goals in the long run.
2. How much is fixed and how much is variable?
Determine if your cost is truly fixed. See if you can find a way to lower it, and determine how long this cost will continue.
When you come across a variable expense, understand what can affect the cost and see if you can predict fluctuation to determine the best times to buy.
By keeping these pointers in mind and consistently applying them, you’ll be well on your way to achieving your financial goals.