Most financial advice you hear is just the same recycled advice that is passed from person to person. Pay your savings account each month as if it’s one of your bills. Cook at home more instead of dining out or ordering DoorDash. Pay off your highest-interest debts first. If you’ve heard them once, you’ve heard them a million times.
What if those sage yet trite pieces of advice just aren’t cutting it? If you’re tired of just barely making it or you know your budget isn’t serving you as well as it could, make this the year you finally conquer the art of personal finances by using these steps.
Break Down Your Budget into Specific Categories
When people work out their household budget, they usually separate it into general categories like bills, savings, food and living expenses, and entertainment or fun money. With such broad categories, though, it’s easy to lose track of how much of your budget is going toward small yet avoidable expenses.
Instead, break it down into smaller, more specific categories. Have a separate category for each monthly bill, separate groceries from your dining out or delivery food budget, separate various forms of entertainment like shopping vs. going to the movies, and so on.
When you do this, you pay more attention to each dollar. It’s much easier to notice that you spent an extra $17 of your $200 dining out budget compared to an extra $17 of your $500 food budget.
Keep a Spending Journal
If you’ve ever tried to take on a healthier diet (who hasn’t?), you’ve probably heard of a food diary. The idea is that it holds you accountable for every nibble because you have to write it down, so you make better choices. A spending journal works the same way.
Write down every purchase you make within each category of your budget. Follow your budget throughout the month or week. This lets you make adjustments before it’s too late; you can see that you’re only 25% of the way through the month but you’ve blown through 50% of your shopping budget.
Having that visual is all the more important in the world of cashless transactions. It’s easier to track your spending when you can see your money moving.
Start Talking Finances
You might not be able to make more money appear just by talking about it…or might you? The cultural norm that it’s impolite to talk about money only benefits corporations that profit from underpaying and/or overcharging people.
For starters, start talking openly about finances with those in your household who contribute to the finances. This way, everyone knows where the household stands and is working toward the same goals.
Second, start talking more openly about finances with friends and family members. You might discover that you’re overpaying for your phone bill, or that they have some handy money-saving strategies you didn’t know about.
Open the Door to Negotiations
You may be surprised by how many of your expenses can be negotiable. Did you know you can often negotiate down your insurance rates and your rent, for example? In fact, many large-scale landlords propose high rent increases when tenants’ leases are up for renewal so that they have room to negotiate if they need to convince the tenant to stay.
When your lease or your insurance contract comes up for renewal, get some comparable rates from competitors and share them with your insurance company or landlord. There’s a good chance they’ll lower your rate, and at a minimum, it’s worth your time to try.
Time Your Purchases Strategically
The saying that “timing is everything” might be a bit of an exaggeration, but timing does have an impact on your purchases and finances. If you’re looking for a new home, try to buy or rent at a time of the year that is less desirable to move – usually that’s the winter. If you want to buy a new vehicle, buy it in the summer when the next year’s models are about to be released because most dealerships want to sell this year’s inventory to make room.
Timing even makes a difference for groceries. Find out when your grocery store releases its new weekly deals. Mid-week is most common but it can vary for each store. There are best days of the week for almost any purchase.
Making Your Budget Work for You
So many people struggle for years to get a solid handle on their budget and their finances without any luck. Sometimes you just need to switch it up and try some new strategies. Try out the steps above and find the combination of strategies to finally get on top of your finances.
Need help bossing up your budget? We can help! My Online Learning Center is filled with budgeting downloads and classes to help you put these strategies and other tips into practice. Sign up for our free Master Your Money class today!