In today’s DIY-dominated world, more and more “things” can be completed with a nail gun, a gallon of paint, recycled wood and an extra hour of free time. These may not be the exact ingredients in the recipe to reduce your overall spending, but the DIY mentality can certainly be applied! Here are a handful of easy, do-it-yourself, non-lifestyle changing tips to help you live a more financially-balanced life.
“The best things in life are free. The second best are very expensive.” – Coco Chanel
Establish a budget
Here are a few bird’s-eye-view thoughts on budget creation:
- Choose something worthy of working toward. Having something to keep you motivated will help keep you on track with your financial goals. Perhaps it’s that vacation you’ve always wanted to experience, or the ability to provide more financial assistance toward your children’s college education, or a down-payment on your own home. Whatever you choose, be sure to keep your eyes on the prize!
- As accountants, it is all too often that we hear, “I don’t know where all my money went!” Well, it certainly went somewhere. It’s a beneficial (and easy) habit to log/track all your spending, and there are dozens of programs and smartphone apps that make this process a breeze.
- It’s important to retrain the way you think about your money. Instead of saving what’s left after spending, institute a spend-what’s-left-after-saving mentality.
Schedule periodic check-ups
Just like your yearly physical where you take the time to make sure your health is on the up and up, so too should you take a moment (or several) to examine your finances.
This should be fairly painless if you have (and follow) a detailed budget plan. I recommend spreading this check-up across several months (or longer, if needed) to ensure you give yourself plenty of time to properly evaluate your current financial state.
- Start by assigning review dates to each asset and debt/bill. This is where having a comprehensive budget comes in handy, as all your assets and expenses should already be organized. The review date can be an arbitrary date or perhaps a month or so before a renewal is due, allowing you plenty of time to shop around before committing to another full year. Be sure to include:
- Assets: Think checking, savings and retirement accounts.
- Debt: Think credit cards, car loans, student loans, mortgage, etc.
- Bills: Think cable television, gym membership, car insurance, etc.
- It’s also very helpful to pull a complete credit report. You are entitled to one free copy of your credit report every 12 months from each of the three nationwide credit reporting companies (Equifax, Experian, TransUnion).
- What you’re looking for is certainly different for each asset/expense but the general gist is this: is your money being spent/invested wisely? In some cases, it may be best to have your financial planner help you with the yearly check-up, especially when looking into investment accounts or other large-impact accounts; however, many of your day-to-day expenses can easily be reviewed by you. Here are a few examples to check on:
- Assets: Are you getting the most out of your accounts? Shop around to see what other banks offer for Annual Percentage Yield (APY). Is it more than your current rate? If so, would it be worth switching banks for the increased return each month?
- Debt: Are you happy with the rewards your credit card is offering? Don’t forget to take advantage of promotions for interest-free periods and reduced rates on balance transfers. Would it be beneficial to consolidate and refinance your student loans?
- Bills: Is your cable provider offering any promotions? Can your car insurance premiums be lowered due to your good driving? Perhaps there’s a new gym nearby offering a lower monthly membership. Oftentimes if you are a customer in good standing, a simple call can save you a few dollars each month or, at the very least, can reassure you that you are spending wisely! Reviewing your monthly bills is also the perfect chance to reconsider if you need a particular service at all. I’m certainly not suggesting you rid yourself of car insurance, but perhaps you tend to read your news online and no longer have a need for a weekly newspaper subscription.
Be conscious of what you spend
Life is way too short to not enjoy it, but you’d be amazed at what taking advantage of reasonably priced (or better yet, FREE) activities can do to your spirits and bank account alike.
- Enjoy the movies, but hate the price tag? Find out when your local theaters offer discounted ticket days! Better yet, when the weather’s nice, look for places that offer free “movie in the park” evenings!
- Love to be outdoors? There are hundreds of spots just a short drive from D.C. that offer free/inexpensive day passes. Better yet, invest in a year-round entry pass to your favorite National Park! A personal favorite of mine is the Shenandoah National Park annual pass for just $50.00 a year.
- Don’t forget about all the museums we have available to us here in the D.C. area, not to mention the countless activities you can find with a quick “free activities” Google search.
It takes a village
Think you are alone in the effort to spend less and save more? You’re not! What could be better than swapping services with friends and family? It’s a win-win!
- Trade babysitting services with a friend or neighbor! Everyone gets a date night and no one has to find the extra funds for a sitter!
- Ask a friend for help with a home improvement or organization project in exchange for an afternoon helping them with their project. It’s a great way to catch-up with a friend while knocking to-dos off your list!
- Take advantage of community (and online) yard sales to sell unwanted items. This is also a great way to purchases new-to-you items that you don’t want to pay full price for!
Have some fun!
As I mentioned before, life is too short to not enjoy yourself. If I’m being honest, I know that when the mood hits, spending money can be fun! Here are a few suggestions for those once-in-awhile splurges and the unavoidable must-have purchases:
- Do your research. Make sure what you are buying is the best deal available and not just the easiest choice.
- Don’t wait until the last minute. Delaying a purchase that you actually need may force you to purchase something more expensive than your budget, as well as increase the chance of having to pay extra for rush shipping.
- The 24-Hour rule. Want something BIG? Make sure you follow my earlier suggestion and do your research, but before you take the jump, wait 24-hours. If you can still justify its value a day later, then go ahead. However, after 24 hours you may see more reasons to save the money than you will to spend it. The waiting gives you time to reconsider potentially unwise purchases.
- A reasonable treat. If it’s a latte a few times a week, drinks with a friend each month, or a monthly manicure that keeps your spirits lifted and your motivation up, then by all means, indulge! Just be sure you continue to work toward your priorities and you don’t let your indulgences get out of hand. Just another great example as to why tracking your purchases can be so helpful.
These slight changes may not make you a millionaire, but they will help you develop proper spending habits that will make the occasional splurge that much sweeter.
Written by Danielle Grant