As costs rise, many people around the world are having to consider more frugal living.
But that doesn’t mean you still can’t set financial goals, and crush them, in 2024.
With a plan for your money, and the right actions to put that plan into place, you can reduce your spending and put your money to work for you.
Track Your Spending
The first step to getting control of your money is to find out where it is going.
A quick glance over your bank or credit card statement for the month should show you where your biggest areas of spending are.
You may think that it’s better to jump right into your financial goals, without looking at the money habits that you already have.
Why is this important?
Tracking your spending lets you see where the important big bills are (like a car payment) and where the less-important big bills are (like Uber Eats).
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It also allows you to take an honest look at where your money is really going before you make changes to anything.
If your money is all over the place, this also gives you a chance to consolidate.
There are apps that can show you if you’re still paying for extra subscriptions on auto-pay that you forgot about – like that Netflix account your ex is still using (shudder).
Set a Realistic Budget
If you’re used to spending money when you feel like it, setting a budget can feel a little like going on a diet.
Not fun! But just like dieting, your budget has to fit your lifestyle and needs for you to be able to stick to it.
After you’ve looked over your expenses and spending for a month or two, you should be able to see where you can cut your spending, and where that extra money needs to go.
When creating a new budget, write down your necessary expenses first: housing, transportation, food, utilities.
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Make sure those are covered first, before other things like debt payoff, investing, or fun spending. You have to make sure your needs are met.
Paying off your debts
If you have a lot of debt to pay off (or at least reduce), make that one of your budget goals as well.
There are many different debt payoff strategies: pay the smallest debt first, the highest interest rate, debt consolidation.
Find one that works with your budget, your habits, and your personality.
And if you can only make the minimum payments or a few dollars extra each month, pat yourself on the back. You’re still making progress.
Make room to “breathe”
Setting a realistic budget also includes wiggle room. Just like a healthy lifestyle includes room for treats, a realistic budget should also include some fun spending.
It’s better to have it planned for than to blow your entire budget on an impulse buy.
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Plan an amount of fun money that will fit in your budget, but will still allow you to feel like you’re having fun.
Lower Your Bills
We can’t do without these things, but there are ways that even necessary expenses can be reduced to fit a budget.
Food
Eating out and food waste are two of the biggest ways we spend too much on food.
Luckily, a little planning goes a long way toward stretching your food dollar.
Choose four or five tasty, easy-to-make meals and base your weekly meals around those. A big pot of your favorite soup, oatmeal with fun toppings, and bread for sandwiches can set you up for a few days.
Invest in a few good lunch containers or a thermos so you can make the most out of the leftovers.
Electricity
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Despite what your parents told you, leaving a light on isn’t going to cause a sky-high electricity bill.
But there are some greedy appliances in your home that you should reduce for a lower bill.
- Electric heaters are a big one – turn down the heat and wear some extra socks or a blanket at home.
- In the summer, do the opposite: turn the air conditioning up a few degrees, or off altogether.
- Microwaves, dryers, and electric ovens also use a lot of power.
Plan your cooking or reheating to do several things at once, instead of running it continuously. - Hang as much laundry to air-dry as possible. If you can’t hang all your laundry, at least take out heavy things like jeans and towels to hang over the back of a chair.
- Using the dryer just for light items can save you a lot of drying time.
Debt Management
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Debt can be a great tool to help you reach your goals in life: owning a car, going to school, even owning a home.
However, if debt gets out of control, it can also be incredibly stressful. Here are some ways to manage your debt.
- Debt consolidation: If you have several small high-interest debts, debt consolidation may be a good option. This can give you one payment at a lower rate than you had before.
Before you do this, be sure you are actually getting a better deal! - Debt in collections: If you have any debt that has gone to collections, you may have the opportunity to negotiate a lower payment to settle the debt.
If you do this, and settle the debt, make sure to get a letter of confirmation from the collections company that the debt is gone.
This may hit your credit score, but once the debt is settled, you’ll be on your way up.
Emergency Fund
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Finally, a plan for your money has to include an emergency fund. Having this cushion gives you peace of mind. Whether your car breaks down, you need a trip to urgent care, or you need to travel for an emergency, having enough money saved to handle the expense will allow you to avoid going back into debt.
Bottom line
Personal finance can be tricky, but getting spending under control can be the first step toward financial success.
Once you have the money available that you didn’t spend, you’ll be able to start crushing your other goals.
