Do you ever feel like money is just disappearing from your wallet or bank account? Well, the money is going somewhere, but maybe not where you want it to go. There are a ton of unnecessary expenditures that trickle money out of your wallet. The good news is that you can fight back and keep more of your hard earned money.
Here are 10 tips on how you can reduce the drain on your wallet:
1. Track Your Spending
They say “information is power” and there is no exception when it comes to your finances. If you are not tracking your spending, then most likely, you have dollars falling through the cracks. By tracking what you spend, you can more easily identify the problem areas and become more mindful with your purchases. You can track your spending manually with spreadsheets, through credit card statements/receipts, or use an automated solution like YNAB.
2. Reduce Impulse Spending
Impulse spending are those split-second purchases you make. This type of spending leads to a lot of waste or unnecessary purchases. If you can reduce or cut out these type of purchases, you will continue to end up with more money in your pocket. Personally, my kryptonite is the grocery store…I almost always come out with things I don’t need.
3. Cut Down on Every Day Purchases
I know people have daily habitual purchases they “have” to make, like the morning Starbucks or grabbing lunch on your break. Instead, try to make a habit of making coffee or lunch at home and bring it with you. This allows you to save some money every week by buying these things in bulk ahead of time.
4. Set Financial Goals
Goals naturally make people more purposeful because they are working towards something. So by having financial goals, you will be inclined to be mindful of your spending. These goals can something small like “I want to spend $10 less on groceries this week” or something large like “I want to pay off my car loan 1 year early”. In either case, having a goal will promote more meaningful spending.
5. Have an Emergency Fund
You may be asking yourself “How does having an emergency fund lessen the drain on my wallet?” Well, an emergency fund will help you during those unplanned moments. Unplanned moments can really put some financial pressure on you, but an emergency fund can help lessen the pressure. The hope is that the emergency fund can cover the unplanned expenses rather that you having to come up with a payment plan or taking out a loan. Afterall, it is much better to pay yourself back than having to pay someone else. Ideally, an emergency fund should be about 3-6 months of expenses.
6. Don’t be Late on Payments
Being late on any kind of payment typically comes at a cost. The cost is usually a fee, and in most cases, this fee is avoidable. Be mindful of due dates and try your best to plan your payments in advance.
7. Avoid Carrying a Balance
When you carry a balance on a credit card, you are paying an annual percentage rate (APR) on the total amount owed on the statement. This is a fee the company charges you for loaning you money through the credit card. When you use credit cards, you are spending someone else’s money, not your own. That being said, it is important to pay statements in full so you don’t incur these fees. By not carrying a balance on a credit card, there is no drain on your wallet by these fees.
This is our #1 Rule when using credit card. Check out some other rules on our Top 7 Rules for Credit Cards.
8. Watch Out for Processing Fees
Again, fees are so wasteful to the person paying them and is a complete drain on the wallet. Watch out for processing fees when making online or in-store payments. People typically overlook these fees for convenience. However, if you need to save money, you should find another way to pay. Your wallet will thank you later.
9. Stop Unnecessary Recurring Payments
It is typically more profitable for a company to get you on recurring payments rather than a bulk payment. This also leads to people forgetting or neglecting those recurring payments, which means less money in their pockets. Cut the recurring payments for services you no longer need or find more affordable alternatives for the services. Yes, this means cancel the gym membership you never use and go for a run or cut the cable and sign up for some alternative with a lower monthly fee (Netflix, Hulu, YouTube TV).
10. Forget the Joneses, Keep Up with Yourself
Keeping up with the Joneses can be expensive – especially if that appearance is above your means. Let’s be honest with ourselves and admit that how you feel is more important than how people perceive you. If you can have both, great, but if it is stressful and draining to keep up with friends or colleagues, it is better to save your money, sanity, and overall health – financially and otherwise.
Have you tried any of these tips? What has been your experience? Share with us below.