The festive season is coming up fast which means that you’ll be bleeding your credit cards dry to buy things that you don’t really need, only to start off the New Year with credit card bills start piling up under doormats and mail boxes.
But you can avoid this dreadful scenario by going on a financial diet, so that you kick off the holiday season in the best financial shape of your life.
Taking control of your finances from an early stage in life can significantly lower your bills and boost your bank account. But trimming unnecessary expenses is easier said than done.
A strict financial diet includes identifying unnecessary expenses or overspending habits, re-evaluating and changing your budget and making an overall lifestyle change that is more in line with your long-term financial goals.
So are you ready to go on a financial diet? Here are some strategies from financial experts to guide you along the way.
Track Your Expenses
If your goal is to cut back on your budget, you need to start by making a budget. Freedom Debt Relief’s vice president, Kevin Gallegos, says that most people talk about trimming their expenses, but very few of them have a plan of action to help them achieve this goal. You don’t need a degree in finance or a fancy software to create a budget – just a pen and pencil will do.
If you’re feeling fancy, you can download a budgeting app that tracks your expenses and optimizes savings. Acorn and PocketGuard are great online tools to help you manage your finances so that you always know how much you’re spending and how much you have left over to pay the bills.
Once you get in the habit of creating a budget, you’ll be able to identify any money leaks that are draining your savings. Maybe you have a subscription that you don’t really use that is taking away a small chunk of your earning every month. Or perhaps you shop impulsively and don’t avail discounts and coupons when buying groceries at the supermarket. Once you have a budget in place, you can plan your expenditure more strategically to maximize your savings.
Change Your Mindset
You don’t necessarily need to think of this financial diet as depriving yourself of things that you want to buy. Instead, consider it as a reassessment of your financial strategy to help you gain control of your money rather than it being the other way around.
Most people fail to get into the habit of saving because putting the money away for a long-term goal doesn’t give them any instant gratification. Instead, they perceive it as a loss instead of a gift to our future selves.
Maybe you need to sacrifice you morning cappuccinos to save a few extra bucks for an emergency or a retirement fund. You’ll be surprised to know how quickly the money multiplies once you invest it smartly.
Check subscriptions
Subscription services are widespread these days and sometimes we sign up for a trial period for an online service and forget to cancel which ends up costing us a lot of money every month.
Trilogy Financial’s managing vice president, Mile Broker, says that he has seen many clients who have been paying subscription for a service for years without even realizing it. Broker advises looking at your bank statements to see if there is an unnecessary service that is draining your bank account.
Save, Save and Save
Starting a retirement savings account as early as possible is the smartest money move to ensure long-term financial well-being.
If you’re spending a lot of time and effort in cutting your budget only to spend the money on another meaningless expenditure, you’re not making any progress in terms of your financial ‘weight-loss’ Just like in a diet, you need to change your money habits and stash the freed up funds from your budget into a savings account.
Experts recommend saving money before you even see it. So set up an automatic withdrawal system that takes a certain amount of money from your current account every month and puts it in your saving account.
