Ok, maybe tomorrow you won’t see much of a difference, but in a month, you will, and in a year, you may have to come up with new goals because this article helped you accomplish your current ones
- Do an income/spending ratio analysis to inform yourself where you are at.
The first thing to hitting almost every goal, including your money goals, is to be well informed. When hitting your money goals, you should know how much money you are spending and on what, to reevaluate your situation.
Look at how much money you spend on the big required stuff like Rent, insurance, student loan payments and car payments. Then look at the small required stuff, like toilet paper, water/ electric bill, cell phone bill, staple foods, credit card interest, etc. Next look at the non-essentials, like going out to eat, alcohol, Starbucks, Movies, subscription services like Netflix and Spotify. I look at my credit card statement and use apps like “Mint” to track my spending.
Once you get all the money going out, subtract it from the money you make and that equals money left over. That money left over is your ticket to your money goals. The more you accumulate, the faster you get to your goals.
2. Break the habits that cause you to spend money.
Start with the easy habits because once you start to save money for barely giving up anything, it will be easier to break the bigger habits. Here are some common habits people don’t realize they are losing so much money on.
- Going out for coffee – you can make the coffee at home. And in fact, if you normally get coffee once a day and it on average costs $3.50 a cup and then stop…you will have saved $1,277.50 that year. That can buy you a quality espresso machine (you can even justify buying one now if you promise yourself not to go out for coffee anymore).
- Going out to eat for lunch/ dinner– costs an average of $10 bucks a day, and with an average of 200 works days a year you would save $2,000. Bring bag lunches.
- Getting drinks at bars – why spend $30 on 2 drinks plus tips when you can buy a very nice bottle at home that lasts way longer for the same price.
- Shopping at your neighborhood grocery store – You can spend up to 50% more for the same groceries at a neighborhood grocery then at Aldi or a wholesaler. If you could cut monthly groceries down from $1000 to $250 by just driving a couple miles further you should.
- Check out the habits section for more ways to save by breaking bad habits.
3. Look at your interest rates and reevaluate.
If you have loans make a list with every loan organized by the percentage of interest accruing. For example, look at this one:
Credit card $5000 – 22.99%
Student Loans
1. $2000 – 6%
2. $15,000 – 5.69%
3…
$14,000 car loan – – 3.1%
$1,000 car loan – 1.9%
and so on…
Consider the possibility of refinancing with a lower percentage – if you can maybe put you student loans into forbearance until you credit card debt is paid in full. In general, pay off the higher interest rate loans first then then lower. Read Restructuring interest for more details.
4. Rethink your priorities
Once you have broken some bad habits, and figured out that you aren’t losing unnecessary money to interest payments it is time to rethink your priorities. This could be looking for a higher paying job, spending less time one Facebook, creating your own business, figuring out where your time is being spent, finding a cheaper apartment or the big one, buying a house. You need to ask where I am now, where do I want to be, and where do my priorities need to be to get there.
5. Executing your Plan
The next hardest and scariest step is executing your plan. First start with the small things like spending less time on social media, and more time on reading about what you want to be, be informed. Once you learn what to do, it becomes more natural to do it, but you still need to start. Start looking for a better cheaper apartment, see if you can buy a house, start your business, invest, adventure, go outside of your bubble. The only thing stopping yourself from reaching your goal is not taking the first steps.
6. Rinse and Repeat
Regularly do an income spending ratio analysis to keep stay informed and prove to yourself that what you are doing is working. Keep vigilant and beware of new bad habits forming, and keep trimming down on the ones you still have. As you credit score grows, keep refinancing your loans to get lower rates, and keep paying off the higher rate loans, saving you thousands in interest payments. As you grow, the more you realize there is to grow. Rethink your priorities because you may have better ones now then you did in the past. Finally, execute your plans and achieve your money goals.
Life is short, so why wait.
