:max_bytes(150000):strip_icc()/GettyImages-1782209686-531ec1a203d548219039be2c82df4d08.jpg "A Step-by-Step Guide to Financial Success")
Inflation impacts everything from the cost of groceries to housing to gas and much more. To save money, you’ll need to be smart about slashing monthly expenses everywhere you can. These tips will show you how.
Key Takeaways
- Track your spending. If you don’t know where your money is going, you can’t cut unnecessary expenses.
- There are multiple approaches to budgeting, depending on your household’s needs.
- Once you settle on the right budget for your family, it’s important to stick to it.
- Get rid of subscriptions you are no longer using.
1. Understand Your Spending
To change your spending, you’ll need to track it first.
“You can’t fix something if you don’t know it’s broken, right? Gaining awareness can help you identify the areas you need to cut down,” says Dave Flegal, a certified public accountant, certified financial planner, and founder of Flegal Financial Planning in Cleveland, Ohio.
“Several options include reviewing bank statements, keeping receipts and tracking spending in Excel, [and using] a budget app.”
One you know what you’re spending on, you can seek out coupons for your recurring expenses. But be sure to read the coupon’s fine print before heading to the store.
2. Create a Budget That Is Right for You
Make a spending plan for your life with all of your expenses. Also, list your income and savings goals. This budget will be your guide as you trim your expenses. Start with a budgeting calculator, and then move to determining the right strategy for your family.
There are several different types of budgets to choose from.
- The Zero-Based Budget. You assign every dollar of your income to a specific expense or savings goal, so your income minus your expenses equals zero.
- The 50/30/20 Budget directs 50% of your take-home pay toward needs, 30% toward wants, and 20% toward savings, which includes debt payments.
- The Envelope System requires an envelope for every expense category and putting physical cash into envelopes.
- The Pay Yourself First Method involves setting up automatic transfers to a savings or investment account right after you’re paid.
There are also budgeting systems related to paying down your debts. You can go the debt avalanche route or the debt snowball approach. With a debt avalanche, you first pay off debt with the highest interest rate. A debt snowball prioritizes small wins by prioritizing paying off the smallest debt first and working your way up to bigger debts.
3. Cancel Subscriptions You No Longer Use
There’s a good chance you have at least one subscription that you aren’t using. Make a point to cancel it—today. And if you have more than one, it is even better to cancel duplicates and save.
You can find out which ones you’re not using by simply looking at your credit card or debit card statement. Apps like Trim by OneMain and Rocket Money can help you do this, too.
$1 Billion
How much Rocket Money claims its members have saved due to bill negotiations, subscription cancelations, and deposits on savings. But first, you have to give them all your banking information.
4. Show Yourself Some Grace
You may not be a financial expert, but give yourself some credit.
“Don’t shame yourself for not having a perfect grasp on your finances,” Flegal says. “Take the first step toward understanding your spending and build little habits that compound over time.”
It’s important to start small and keep going.
The Bottom Line
Getting smart about your spending gives you more breathing room, even during times of high inflation. If you do it right, your finances will seem more manageable. You’ll be closer to reaching your financial goals. So choose a budget that’s right for you and get started. It will give your finances a boost.
