Summer vacations, beach trips, weddings, concerts, bonfires and cookouts tend to leave our souls and stomachs fuller than our wallets. In fact, according to a recent Capital One survey, 87% of Americans spend more money on socializing during the summer months than any other time. Good weather and carefree vibes may encourage us to spend more than we normally would, but the seasons are changing and your habits probably should, too. This year, let the falling leaves inspire you to get serious about your finances this winter. We’ve outlined some of our best tips for saving money and improving your fiscal health. Heed our advice and you’ll be back on track before the new year begins.
Assess your budgetCreating a budget is personal finance 101, but it’s important to remember that a budget is not a “set and forget” tool. All your planning and calculations are meaningless if you don’t follow through or keep it up to date. Click To Tweet
Creating a budget is personal finance 101, but it’s important to remember that a budget is not a “set and forget” tool. All your planning and calculations are meaningless if you don’t follow through or keep it up to date. This winter, open up your budget and adjust anything that doesn’t align with your current lifestyle.
Evaluating your expenditures relative to your take-home pay will help you keep your spending in check and set more realistic goals for the future. Since budgeting can be daunting, consider downloading a budget app like Mint, PocketGuard or You Need A Budget to help you stay on track. Just having them on your phone can encourage better financial behavior.
Find recurring savings opportunities
Checking in on your budget is a great start, but you should also find out how to save money each month. Trimming regular expenses like groceries and monthly bills will free up funds for more fun spending and long-term goals.
Little things like joining your store’s loyalty program, making a list, buying in bulk and choosing generic brands can add up to serious savings over time. If you have dining out commitments, suggest a restaurant with specials and promotions. Reservations already made? Request that everyone order family style or only pay for the items they eat.
Even cable and cell phone bills, which seem standard, are negotiable. Give your service provider a call and ask what you can do to secure a lower fee. Even something as simple as signing up for automatic payments could provide significant savings. Then, consider terminating or reducing any services you don’t really use or need. When it comes to reducing your electricity and water bill, try turning your water heater down a few degrees and unplugging your devices when they aren’t in use.
Of course, there are some categories you can’t skimp on, like homeowners insurance. You can still ask if you qualify for home insurance discounts, like an affinity group, no-claims or smart home discount, though. You can also adjust your deductible or switch providers to pay a lower insurance premium.
Research investing opportunities
Investing may seem intimidating, but you don’t have to be an alchemist or Warren Buffet to turn your money into more money. Think of 401(k)s and IRAs as gateway accounts. Next, you’ll want to set up automated transfers to another investment account with stocks, bonds and mutual funds. Passively managed funds require the least work, but you can also use tools like SigFig, Acorns, and Personal Capital to manage accounts yourself. You can start with as little as the change from your morning coffee.
It’s best to invest in a mix of different assets, which bankers call diversifying your portfolio. Exchange-traded funds (ETFs), CD ladders and penny stocks make it even easier. Treasury bonds are another conservative option that are easy to break into. You won’t hit it big, but you will earn higher interest than you would in a checking or savings account.
Double down on debt
Saving and building wealth are great, but you should also get proactive about eliminating or reducing your debt. Some experts say that you focus on your most expensive and highest interest debts first, while others suggest paying off small balances before moving on to the more imposing ones. You can also consolidate your debt by taking out a new loan with lower interest rates or transferring debt to a balance transfer credit card with an introductory 0% rate.
No matter which debts you choose to tackle, you should sign up for automatic repayments at the highest amount you can afford. Some companies will even give a rate reduction if you funnel a certain amount of money to your debt every month. This not only ensures you never incur a late fee, but also reduces the total interest you’ll pay over time.
Ideally, you’d review your finances every quarter. Winter is an especially important time to check in because it’s sandwiched between two spend-happy seasons: summer and the holidays. While you’re taking stock, consider setting up a special holiday fund to cover any travel, event and gift expenses you expect to incur in the next quarter.
Start by making a list of all the people you plan to give presents to and setting a maximum price limit for each one. Add the total to an estimation for what you may spend on holiday dinners, parties and shows, as well as plane tickets, train fare and rental car costs. Don’t forget to account for decorations and holiday cards if you usually spend on those holiday traditions, too. Once you have a proposed budget and goal dates, you’ll know just how aggressively you need to squirrel away in the coming weeks.