Whether you own your home or rent it, there’s no doubt that inflation has hurt your budget. Even though you can’t change the way the economy is changing, that doesn’t mean you can’t do anything to stop prices from going up. Your buying power goes down when inflation is high, so you have to spend more and get less in return. As a result, higher prices make it harder to save money and achieve your financial goals. You might not be ready to do something drastic, like move to a smaller apartment or take the bus. Instead, start with small changes that will stretch your money and give you more bang for your buck.
1. Set financial goals.
Setting goals is an important but often overlooked step when trying to make your finances better. Don’t worry if it seems too soon based on how things are going in your life right now. It’s powerful to set goals and make a plan to achieve them.
Saving with a clear goal in mind makes you more deliberate about how you work, save, and spend your money. Focusing on your financial goals will also give you the clarity you need to make good money choices and the drive to keep going.
2. Use your money wisely.
Getting good at making your money go further takes a certain level of financial awareness. Do you have a plan for how you’ll spend your money once you get paid, or do you just go with the flow?
A plan is important, and a budget is a plan for how to spend. Making a budget is just making a plan for how you’re going to spend your money. To learn how to live on a budget, you must always make a plan for how you will spend your money and take steps to stick to that plan throughout the budget period.
Making a budget is a marathon.
The first step to budgeting well is to expect to have to learn as you go. Getting good at budgeting is a useful skill that takes time to learn. So, make a promise to keep going even when it feels like you’re doing everything wrong during the hard months.
Make a financial plan.
If you type “how to budget” into Google, you’ll see a lot of different budgeting types and options. Don’t let this overwhelm you. As you get better at budgeting, you’ll start to figure out what works and what doesn’t for you.
Instead of making a budget that fits everyone, make one that fits some people. There are many ways to set up a budget. Each of them will help you achieve your goals more quickly if you use them regularly. You may decide that you’d rather use digital tools to manage your money or a budget binder to keep track of a more traditional paper budget.
People have a bad habit of making things harder than they need to be, but budgeting doesn’t need to be hard or complicated. If you’ve tried budgeting by percentages and failed miserably, there are easier ways to stretch your money further.
We’ve found that many people feel more in control of their finances when they use a zero-based (or zero-sum) budget to manage their money.
A zero-based budget is the simplest kind, and it looks like this: income-expenses = 0.
Give every dollar you earn a specific “job” to do in your finances. Every dollar has to be used for something, and it’s up to you to decide if that’s to spend, save, invest, or give. Once you’ve decided how to spend each dollar and your total income minus your total expenses equals zero, you’ve got a good zero-based budget.
3. Keep track of your spending.
If you often wonder where your money went, it’s time to keep track of your spending. You may have a general idea of where your money goes each month, but how clear are you on the details? For instance, do you know how much you spent last month on groceries, money, and eating out?
Find out how much you’re spending in each category of your budget. Controlling your spending is especially important when determining how much rent or car payment you can afford each month.
Get a notepad or your phone and write down every time you spend money. Leave out fixed costs, since you’ll be keeping track of those in your real budget. Instead, keep track of your trips to Target, grocery shopping, and coffee breaks.
If you can, keep track of your spending for a whole month. If you can’t get away for a month, try to get away for at least two weeks. At the end of your tracking period, enter your spending data into a spreadsheet or use a few highlighters to color-code your spending.
Add up how much you’ve spent in each category to see how much you’ve spent overall and compare that to your budget. This exercise will give you valuable information that will help you stretch your money in a more balanced way. Your total spending will show you where you spend most of your money.
Your spending should show what you value and what’s most important to you. If you find out that this is not the case for you, it will be clear what changes you need to make.
4. Avoid overspending
Overspending can sneak up on you. A few swipes of your card for $10 a few times a week may not seem like much, but they can quickly add up to high credit card balances or go over budget.
Consider making these simple changes to cut spending overall:
- Order your groceries online to avoid buying things you don’t need.
- Reduce how often you shop online (e.g., order from Amazon only once per month).
- Keep a list of the things you want or need. When you find a good deal, check your list to see if the item is on it. If it is, buy it. If not, you should move on.
- Stop getting emails from stores that try to get you to spend money.
- Add a line item for personal spending to your budget. Give yourself a certain amount of money that you can spend however you want.
Not because of money.
Overspending too much is often deceiving. In reality, overspending is almost never about the spending itself. Instead, it is almost always caused by something emotional. So, the best way to stop overspending is to figure out what makes you do it and stop doing it.
Think about the last time you felt bad about overspending too much. Then, dig deeper to figure out what your spending was really about. Did you feel tired? Did your day at work go badly? Did you and your partner fight?
We may feel better after shopping because it gives us a rush of adrenaline. But the problem will keep getting worse if you don’t deal with the feelings that make you spend. Instead, pay attention to how you feel the next time you feel the urge to spend money.
Once you know what makes you spend, you can make a plan to avoid them and break your habit of spending too much.
5. Ask about your bills.
Getting better deals on your bills every year is a great way to stretch your dollars. You’ll be surprised by how many of your service providers will lower your rates if you just ask.
Look over your monthly costs and make a list of the people you need to talk to. You can call the company or, if they have it, use their live chat service. Tell the person on the phone that you want to lower your monthly payment and ask what their best deal is. Expect a few “no’s” and a lot of “yes’s,” especially if you ask for a discount in a kind and polite way.
This strategy is perfect for saving money on:
- Utility bills
- Cell phone bill
- Cable bill
- Car insurance bill
- Credit card and bank fees
- Other insurance premiums
The best thing to do with medical bills is to call the billing department and offer to pay a portion of the total balance. The provider is usually willing to settle the account for a small sum.
6. Pay off your debts.
Debt payments, especially those with high-interest rates, can eat up your money quickly. By making a debt payoff plan, you will have a plan for how to pay off your debt and keep the money you were sending to your creditors each month.
Also, if you’ve paid your bills on time in the past, contact your credit card company and ask for a lower interest rate. Refinancing is also a great way to get a lower mortgage payment or lower the minimum payment on personal loans or federal student loans.
Prevent future debt
As you try to get out of debt, it’s best not to take on any more debt. Trading old debt for new debt is a bad idea that will keep you in a never-ending cycle of debt.
7. Think ahead
You can save the most money if you plan for the next quarter or even the next year. Also, saving away enough money for three to six months of living expenses will give you a safety net in case of an emergency.
Having an emergency fund will protect your money in case your finances go up in the future, you get sick, have an accident, or lose your job.
Plan out your costs for the next 6 to 12 months and figure out which ones you can start saving for now. Sinking funds are a way to save for things like Christmas gifts, birthday gifts, tuition, vacations, annual bills, etc.
Save a small amount each month (or each time you get paid) until you have enough to pay for everything. Keep your sinking funds in a separate savings account to avoid accidentally spending them.
8. Use a savings challenge to stretch your money
Competitions and challenges are great ways to get people going. And even adults can have fun when things they would rather not do feel like a game. Start with a simple challenge, like saving every five-dollar bill you get or putting all of your spare change in a jar for a certain amount of time.
Do you tend to be competitive? Ask some close family members or friends to join you. You will all be better off if you hold each other accountable and make things more competitive.
9. Make a meal plan
More than any other tip on this list, planning your meals can help you stretch your money further. You’ve probably noticed that your grocery bill goes up every month. Plan your meals and use that plan to make a list of what you need to buy.
Meal planning is more than just thinking about what you want to eat while you’re out shopping for food. Most of the time, going to the grocery store without a plan will cause you to go over budget.
As of 2021, thirty to forty percent of the food supply in the United States goes to waste.When people go grocery shopping without a plan, they often end up with a fridge full of fresh fruit and vegetables that they don’t use. If your food budget for the month is $1,000, that means that if you don’t plan, you’ll probably waste $300-$400 of that budget.
10. You can save money by giving up cable.
Stopping your cable service is one of the easiest things you can do to save money. 56 percent of homes in the United States no longer have cable or satellite boxes to watch TV shows or movies.
We’re lucky to be able to stop paying for dozens of channels we don’t watch and make our TV experience more personal. Also, the number of streaming services has grown a lot in recent years, and now you can get live sports and bundles without a cable package.
Have a hard time giving up traditional cable and don’t want to? You should keep your subscription, but use tip 5 to get a better deal.
11. Get a thermostat that you can set
Energy costs are also going up, which is a shame. Depending on where you live, even if you’re trying to stretch your money further, costs will go up during the summer. But a programmable thermostat that is Energy Star certified can cut your utility costs by up to 8% per year, which is about $50 per year.
A programmable thermostat will not only save you money, but if you buy a “smart” model that works with Amazon’s Alexa or Google’s Home system, you can also change the temperature by speaking to it.
Double your savings
Some programmable thermostats can cost more than $200, but there are others that are less expensive. Also, many gas and electricity companies will give you money back if you switch to a programmable thermostat.
In some cases, the amount of the rebate may even be more than the price of the thermostat. Before you buy a thermostat, call your utility company to find out which models are eligible for rebates in your area.
12. Use an APP
Want easier ways to stretch your money further? You can get an app for that. Getting around higher prices is easy when you use mobile apps to save money or get cash back on purchases.
You can save money on groceries, household items, and even gas with these apps. Other apps give you cash back when you shop in-store or online at your favorite stores. There are even apps that give you points when you work out.
Keep in mind that using apps that give you cash back won’t make you rich. But if you use them often, you can save money on everyday purchases and earn cashback rewards that you can turn into cash or gift cards.
13. Get a side hustle
There’s no doubt that cutting costs and saving money are good ways to stretch your money further. But if you focus on making more money at the same time, your finances will go into overdrive. Your income will be more diverse and you’ll be able to reach your financial goals faster if you can find new, creative ways to make small amounts of money in your spare time.
Monetize your passion
The good news is that we live in a time when there are many interesting and unique ways to make money. No longer do you have to work extra hours at a job you hate just to make your rent each month.
People are making enough money from side jobs like pet sitting, baking, and even posting on social media to make it their full-time job. Make a list of your favorite things to do and different ways to make money from them.
The Bottom Line
Rest assured that you are not the only one feeling more stress about money. You should know that it is still possible to keep your finances stable in these times of economic uncertainty. If you cut your costs and leave a little room in your budget, you’ll be able to spend your money on the things that are most important to you.