The wonderful thing about personal finance is that it’s really quite simple. At least, the fundamental principles in play are. They’re easy to understand and easy to remember.
At a basic level, to grow your wealth and to be financially successful you need to:
- Spend less than you earn (or live within your means)
- Aim to save as much as -- or more than -- you spend
That second concept is absolutely more difficult to achieve than the first, but it’s a wonderful goal to work towards. Lucky for us, we live in a country of abundance. Most of our needs are easily taken care of; it’s the wants that often trip us up when we’re working towards our financial goals.
If you’re struggling to adhere to the first of these ideas—if you have trouble living within your means and spending less than you earn—it’s going to be impossible to grow your wealth and reach financial stability and independence. You need to get your spending under control.
Read more: Save $5,000 by cutting out these 5 little luxuries
All the financial education and know-how in the world won’t make a difference if you don’t resolve to make a serious lifestyle change and prioritize saving over spending. Being aware that you need to budget isn’t enough; you have to be determined and motivated to establish better money management habits.
Here are some actionable ideas that will show you how to save money
Track your spending
If you’re not even sure how you’re spending too much, you need to start by tracking your cash flow in and out. Make sure you are 100% certain that you know exactly where every penny you spend goes each and every month.
Tracking your spending for a month or two is only step one. Next, you need to actually sit down and critically evaluate the information. Are there costs that are higher than what you assumed or estimated? Are you continuing to pay for expenses you no longer use or want to have access to? Are you losing money to late fees or overdraft charges?
Carefully comb through your expenses and determine if there are any that can be cut completely. Get rid of your landline and only use your cell phone. Cut cable and switch to Internet streaming services like Netflix or Hulu instead. Cancel your gym membership and workout at home for free using resources like Fitness Blender.
This is basic stuff, but don’t think you can skip over it. That's how to save money! Remember, even the little things add up and can push you into debt each month.
Next, make a list of service providers. Take some time to call them and inquire about discounts, lower-priced packages, or alternatives to your current plans. You may want to do a little research before calling, too; if you already have another provider in mind, don’t be afraid to tell the current company that you’ll simply need to cancel their service altogether if they can’t work with you to offer a better price.
Understand what your values are
Having trouble cutting down on the expenses you tracked? You need to be honest with yourself and determine what is truly important to you in order to weed through your costs.
Remember, it’s your money. Only you can determine if an expense or price is worth what you’re paying; you shouldn’t let others influence your purchasing decisions or make you feel as though you have to have certain things.
Have a little heart-to-heart with yourself and understand what it is you value. From there, you can prioritize your money and only allow it to be spent on things that make you feel genuinely satisfied and fulfilled. (And here’s a hint: experiences and relationships are what make us truly happy, not acquiring more material stuff.)
Slay the green-eyed monster
Jealousy can end up costing us a lot of money, especially if we’re constantly comparing ourselves to others and determining that we’ve somehow come up short.
The fact is everyone’s finances are in a different place -- and so are everyone’s priorities. Before you start feeling jealous of friends or family members, consider that you have absolutely no idea what their financial situation really looks like (even if they give you details, if you haven’t actually seen paystubs and bank statements you can’t know for sure).
The friend with the nice car who constantly springs for expensive cruises or resort vacations may come within pennies of emptying her checking account every month. The family member with the McMansion filled with designer furniture may be drowning under massive consumer debts.
Read more: How frugal folks can save even more
Keeping up appearances takes a lot of money, and many people who feel the need to outpace the Joneses’ only look rich. They’re not actually wealthy. Understand that there is a difference, and stop letting your jealousy goad you into doing some overspending of your own.
Instead, practice gratitude and appreciation. Be grateful for all that you do have, and don’t spend time or energy pining over what you don’t. Stop comparing yourself to others and instead find joy in watching your savings account and investment fund balances steadily tick upward -- instead of being miserable as you watch the last couple of cents scuttle out of your checking account month after month after month.
Get comfortable with getting frugal
If you want to get your spending under control, you must do less of it. It really is that simple.
It’s time to embrace being frugal. Stop thinking that frugality is a bad word; it only means that you’re more resourceful and less wasteful. Being frugal means you don’t need so much to be happy and you make the most of the resources you have at your disposal.
This is an excellent time to re-evaluate what is really important to you, and what needs and wants actually look like. Once you know that, it becomes easier to know how to save money.
If you need help kickstarting yourself into minimal spending habits, try making it into a game. Plan a “no-spend weekend,” or even a full week, where you don’t spend any money at all outside of things like your fixed bills and necessary items like food and gas to get to work.
Read more: Managing your money the old fashioned way
Instead of doing activities that cost money or going shopping, have a game night, host a pot-luck dinner, go for lots of walks and hikes, spend some time reading, writing, or even meditating--there are lots of options for spending your time without spending money.
Challenge yourself further after you’ve completed a few successful no-spend weekends and no-spend weeks. Can you go an entire month of opting out of discretionary spending?
You can set other challenges for yourself, too. Try spending freezes on different things. This is a great time to break a bad spending habit or to cut ties with something that is normally always a temptation for you.
Set a goal of going 6 months to a year without buying new clothes. Resolve not to buy any new technology unless an existing device you frequently use -- phone, laptop, tablet, etc -- actually stops working. Make an agreement with your spouse that you’ll brown bag it to work every day and enjoy home-cooked meals in order to go three months without dining out.
Once you give something like a savings challenge or a spending freeze a try, it becomes clear that you really don’t need all that you assumed you did. From there, it becomes easier and easier to get your spending under control as you focus on enjoying what you already have; valuing your relationships and experiencing something over buying stuff; and understanding that frugal is often another word for grateful.
For further reading:
- How to get out of debt quickly in 5 simple steps
- 6 reasons why budgeting is easier than you think
- Paying off credit card debt