Many people make plenty of money to live comfortably, but they struggle to make ends meet each month. It is a paradox that leaves people complaining about the high cost of living and wondering where all of their money is going each month. If this sounds familiar to you, the fact is that you may simply be wasting your money when you could be saving it. You can make a ton of money each month, but you may be “cash poor” if you spend every last dime you have. With every dollar you earn, you have the choice to spend the money or to save it.
So how can you stop wasting your money and keep your cash in your own hands? Here are three ways.
Watch What You Are Buying
One of the biggest complaints many people have is that their money just seems to disappear almost as soon as they get a paycheck. The money is not disappearing, of course. It is gone because you are spending it. If you are not sure where the money is going, this is a sure sign that your spending is wasteful. Consider how hard you work for your money and how easily you let that money go.
Rather than throw money needlessly away, make a conscious decision to be more aware of what you are buying. One strategy to consider involves keeping a journal of all of your purchases for the next week or two. This may not be necessary if you have access to an online banking feature that creates customizable reports. Add up the purchases that were “wants” rather than “needs” at the end of that time period, and you will see exactly how much money you are wasting.
Create a Budget
Many people have created a budget at some point in their lives, but they haven’t properly utilized it. Consider creating a new budget that itemizes all income sources and all expenses. Your budget should not be based on ideals, such as how much you would like to spend on gas. Instead, it should be based on realistic and truthful figures. If you are overspending, lying to yourself by putting false numbers in your budget will not help you out.
Instead, create a realistic budget that shows how your money is really being spent. You can reduce expenses where necessary to adjust your budget. Shop for lower home insurance rates and follow money-saving tips for grocery shopping. Reducing your energy consumption at home by installing water flow measurement devices to appliances to track usage, improving insulation to stop the loss of heat, and more are all ways to reduce spending.
Give Yourself an Allowance
One of the areas that many people have trouble with is overspending with those small expenses here and there. A cup of coffee bought every morning and a lunch or dinner out at a restaurant periodically can add up to hundreds of dollars over the course of a month. Put yourself on a spending allowance that falls in line with your budget. Some people will take out their allowance in cash at the beginning of each month. When the money is gone, they are done spending until the following month. Others are using prepaid credit cards to control spending.
When you take steps to budget more effectively and reduce wasteful spending, you can save money each month. You may use this money to fund a savings account or to reduce debts. Many who have spent wastefully in the past have accumulated debt as a result of their spending habits. If you want to get out of debt, these tips can serve as an excellent starting point.