How To Save And Improve Your Personal Finances

If you want to save money for an emergency fund, for some high-ticket purchases, or for your retirement, you may be wondering where to start because, as far as you can tell, you have no extra money to tuck away. However, by reducing your spending and creating a budget, you can start identifying where you are spending too much money. Once you discover these “money leaks,” you can reallocate these funds to your savings account.

Reduce Your Spending

While there is not much you can do with fixed costs, such as rent or your phone bill, other than shopping around in the hope of finding cheaper providers, there is quite a bit you can do to trim expenses when it comes to how you spend your discretionary income.

In order to start saving, you must find ways to control your spending. Here are 4 ideas to consider:

1. Change your coffee drinking habits.

If you’re bored with your home-brewed coffee, you probably end up spending money at places like Starbucks that know how to select the best flavors and add just the right amount of cream and sugar to stir up a perfect cup of coffee. However, brewing a good cup of coffee is science, not magic. You can whip up your own perfect cup of toffee nut latte by making a 2 shot espresso, adding the right syrup, and filling it with steamed milk. Once you fall in love with your own coffee, then you’ll be saving around $100 a month if you regularly go to coffee shops — because at $5 a cup at a coffee shop, you’re spending around $100 to $150 a month on coffee.

2. Spend less on paperback and hardback books.

If you like to stay well-informed, reducing how many books you buy may seem to be a bad idea. However, you can still read all the books you like each month–just don’t buy the paperback or hardback versions. You may be able to get your books cheaper in a digital version, buy them second hand, or get them free at the library. Only if the book is not available in any of these cheaper forms, should you consider buying the paperback or hardback.

3. Cut down on how much you spend on driving around town and commuting to your job.

When it comes to driving around town on your shopping trips, it’s easy to spend a considerable amount of gas without even realizing it. Instead of taking numerous small shopping trips, plan on one big trip. In some cases, too, the stores may be within walking distance.

For some people, commuting to work may be expensive, which can be discouraging because you’re paying to go to work. If you have excellent public transportation where you live and a long commute to work, you may be able to save money every day by finding a Park-n-Ride near your home and taking advantage of low-cost bus and rail transit services.

4. Save on Grocery shopping.

Grocery shopping can be expensive if you don’t go about it the right way–for instance, you shop when you’re hungry and you don’t have a list of what you should buy. There are many ways to save money when grocery shopping, like using coupons, like not always buying the top brands, and like not buying more perishable vegetables and fruits than you can consume before they spoil. Additionally, you can also save a considerable amount by buying bulk from Costco or from Sam’s club.

Create A Budget

One good way to get to grips with your personal finance is to get a clear idea of how much money is coming in and how much money is going out. Then, on the basis of this overview, plan a budget. A budget will help you quickly see where your money is going. Essentially, you will discover that it is going out in fixed expenses–rent, mortgage, phone bills, etc–and variable expenses–lunches, coffee shops, movies, shopping.

While your fixed expenses will be obvious, your variable expenses may be a little more elusive to figure out because you may not have tracked the small things you’ve been spending money on. If you are not sure where the money is going because you’re only tracking how much you withdraw from your bank account for “petty cash,” then you should start the habit of writing down where you spend your money. Do this for a month and you’ll acquire a lot of insight on how your money is disappearing. It’s usually the small things that you don’t think much about that begin to add up.

If you have suffered an income reduction due to retiring recently, you may be wondering how you can afford your living expenses and still enjoy your golden years. A home loan is an option that might come to mind, but the idea of making monthly mortgage payments may not appeal to you. An alternative is to apply for a reverse loan, which will provide you with money each month. You will be under no obligation to repay the loan balance for as long as you retain ownership of your house and live in it. When you talk to a lender or use a reverse mortgage calculator, you can quickly determine how much money you can access. There are no restrictions regarding how you can spend it, except you must pay off any existing mortgage on your property using reverse mortgage funds as soon as the agreement is signed.

In summary, by reducing how much money you spend on basic things like coffee, books, gas, and groceries, as well as by starting a budget to track your income and expenses, you will find many ways to start saving for your big goals.