I think we’re all hoping for better finances in 2021. Is it just me or do you find that with the social restrictions I seem to be spending way too much time online shopping?? If you’ve been feeling the financial pinch, as well as the social one, then you’re probably wondering what steps you can take to make this year a better one.
While there’s no really easy way of saving money, making it go further, or getting rid of debt, there are ways of making it more enjoyable and satisfying.
Here are three simple tips you can start on right now that will lead to better finances this year and healthy money habits to adopt in the future.
Tip 1 – Track Your Money
It’s so easy for spending to get out of control. With a click of the button and next day delivery, all those little treats end up being a massive splurge on the credit card. Sure you can always persuade yourself it’ll be alright. Maybe it will, but wouldn’t it be great to take ‘maybe’ out of the equation, so you know for sure?
Tracking money is easy. Just take a notebook and pen and draw three lines down a fresh page to make four columns. Head these columns like this:
- Date – this is when you paid for something, or when money came into your account.
- Item – what it was you bought, or where the money came from, such as salary or wages.
- Cost – what you paid or made.
- Balance – this is a running balance of what money is available to you right now. Every time you fill in the other columns, either add or subtract the amount from the figure showing in this column. Start the column off by writing down your current bank balance at the top of every new page.
Don’t forget to add direct debits and other automatic payments. You can pull up a list on your online banking app or latest statement, then fill them in on your tracker along with the dates they are due.
You can do this sort of tracker on the computer, in a spreadsheet, if you want, but having a notebook is quick and easy and you can carry it around in a bag or pocket. Jot down a quick note of spends every time money changes hands.
This is a mechanical exercise that doesn’t take much effort and can be a fun personal challenge. It’s also the basis for all professional bookkeeping so could even lead you to a new career in accounting.
Tip 2 – Use Your Tracker to Cut Your Corners
Nobody wants to deny themselves the nice things. Cutting out the stuff we love is normally the first thing that springs to mind when you think about saving money or cutting back on spending.
But there’s a better way.
The cool thing about tracking where your money is going, is you can start to see patterns in your spending. When you’ve been writing down transactions for a couple of months, you’ll have enough history to start putting all those numbers to work.
Look back at the categories of items you buy, and how much they’re costing. Categories might be car expenses, groceries, clothes, hobbies, entertainment, take away meals, utility charges… there are lots of different spending categories.
Maybe the amount you spend on car fuel surprises you, or perhaps you didn’t quite realise how much take-aways or basic groceries were costing. Once you know where you’re spending more than you like, try and figure out ways to cut that cost:
- Maybe you need to shorten that next road trip you are planning? or budget/save for those extra fuel costs?
- Switch to a cheaper supermarket, or change some branded items to own brand alternatives?
- Question every purchase – do you really need it; do you honestly love it? Can you manage without it?
- Can you switch providers for utilities or Internet, mobile or TV package?
- Are you paying over the odds for insurances?
The broad idea is to dig into where money is going, then look for ways to control it or alter its flow, rather than automatically cutting out life’s little pleasures to save money. Often, you’ll find you can pay less for necessities, meaning you can pay off the credit card faster or still afford an indulgence or two.
Tip 3 – Put Saved Money Away
When you’ve clawed back a bit and reduced the monthly spend on necessities, make sure you get hold of the money you’ve saved or it’ll flutter off in a different direction.
Opening a separate bank account for savings is a good way of tucking that money aside. Online accounts with banks like Revolut are easy to open and run from your phone. You can still get at your money any time, just like a regular bank account, but it’s one step removed from everyday spending.
It’s fine to start with small savings. If you can save a few bucks a month, you’re winning. Stash it away and do the same next month. It takes practice and some determination to change spending and saving habits, so go easy on yourself as you change your money habits.
If expenses crop up and you can’t see a way to save, it’s fine. Don’t give up completely, just start again and move forward. Gradually, you’ll find ways of saving more, especially if you manage to pay off more on credit cards, so your monthly outgoings reduce.
Controlling money becomes its own satisfaction, and over time you’ll find you have more disposable income to have fun with.
WHAT IS ONE THING YOU KNOW YOU NEED TO CUT OUT OF YOUR SPENDING?
Not traveling much these days, just living simply,
p.s I write about expat living in Ireland, minimalism and slow travel (when we can travel!). I am mindful about inbox spam and only send out one email newsletter each month, so to be sure you don’t miss out you should sign up and get all the news straight in your inbox – Sign up now!
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*Disclaimer: This is a sponsored post for Accounting Technicians in Ireland. I only post content that I think my readers will relate to, and brands that I think would add value to my life as well as my readers.