Whether you consider yourself a spender or a saver, we all go through periods where we must tighten our belts to make our dollars go further. Lately, as so many continue to wait on unemployment checks or they’re dealing with pay cuts at work, we’ve had to make sacrifices. With the right approach, though, you can implement some tools that can serve you when times may not be so thin. Your approach to money doesn’t have to be a dreadful affair. More often than not, after a good hard look at the inflow and outflow of our spending ability, we have a better sense of control even if we might be in the red this month.
Here are five tips on fighting the financial dragon this season:
Make budgeting fun again
A monthly budgeting routine can be a game changer in how you steward your resources. How you approach the budgeting task itself can take various forms. You could hand write it out in a notepad or use online tools like Mint that link to all of your accounts and do the heavy lifting of partitioning out how you spend. When you partition a strict dollar amount to, say, groceries, it actually gives you a lot of freedom in how you buy. You can confidently walk in the store and know that within a certain money limit, you can buy anything you want. It’s almost as if discipline equals freedom. A thirty minute money review every month can give you a much better feel for where your hard earned money is going. Make it an occasion. Pair it with your favorite beverage or food and reward yourself for being honest with how you spend. Just being aware that you’re spending $45/month on unnecessary energy drinks or unhealthy snacks can go a long way in helping you reframe which things need to be prioritized right now.
Review your subscriptions
Okay, I get it, we’re all watching Netflix and Hulu right now. Perhaps that $8-12 a month is worth a lot to you. But those free trials always come with a system that hopes that you forget that you gave out your credit card information. Are you actually using YouTube Music enough to justify the monthly expense? Did that NBC Sports package you bought last summer ever expire? Ask Trim is a very helpful online tool that will give you assessments of all your subscription services so it’s easy to review and make better decisions on where your money is going. Maybe you can live with just an Amazon Prime and Video for a few months without other services.
Get some fresh insurance quotes
If you have a favorite small town-style store that you love to support, customer loyalty can add a special aspect to the shopping experience. When it comes to your insurance company, though, save the loyalty for your local markets. If it’s been a while since you got a quote for car or home insurance, it could be well worth your time to shop around. Getting quotes for auto and home insurance take very few steps and can pay off big. Rates change all the time and depend on your own history and location so different companies could offer better rates than you expected. Check out the easy tools on NerdWallet to easily compare prices. I got a new quote for my home insurance last year and ended up saving about $1 per day. With an hour of work, I was effectively paid back about $360.
Know the cost of convenience
There is a common misconception that eating healthier means spending more money. “Whole Foods? More like ‘Whole Paycheck,’ amiright?” But when you start to realize how much more expensive it is to buy from any restaurant, shopping in the health food section of your grocery store is actually quite a bit less expensive in comparison. Sure, we could make the case that your long term health and wallet will drastically benefit when you swap fries for frittatas, but even in the short term, it’s far less expensive. There is a powerful allure to spending money now on one thing that looks cheap instead of opting for a cheaper by the dozen strategy. Thus, the dollar menu will continue its appeal despite the unseen costs. Consider a cheaper approach to breakfast:
If you shop at Aldi, Grocery Outlet, or Trader Joe’s you can get a dozen high quality pasture raised eggs for $4. An Egg McMuffin will run you $2.79. Even by a simple comparison of price per calorie, the eggs win out by far. A home cooked, three egg scramble with a tablespoon of quality butter or other oil will cost about $1. To say nothing of the far superior nutrient density, that is the same number of calories as America’s favorite breakfast sandwich at 1/3rd the cost. Even if you opt for the most expensive eggs you can find, around $8 a dozen where they throw in the names of the chickens for you on the label, you’re still realizing a 30% cost per calorie savings. The only catch is, you have to clean out the pan. Is two minutes of extra clean up work worth a 30-60% cost reduction for breakfast?
As a rule of thumb, paying for someone else to cook your food will run you about three times as much as cooking it at home. When you’re doing your very best to tighten your budget, planning out home cooked meals is some of the lowest hanging fruit.
Leverage your stimulus
Whether you’re looking at a handsome tax return or the Government stimulus from the 2020 CARES act is en route to your account, managing a sudden windfall of money will be an important task for all of us. Here are a few ideas on how to manage a sudden windfall.
Pad your emergency fund. Insurance only goes so far and over half of Americans have less than $1000 in savings. Shoot for setting aside at least $2,467 to finance unexpected medical, auto, or job loss expenses.
Consider an extra contribution to your retirement account. While it’s usually a good idea to set aside money in a retirement fund, at the time of this writing, a lot of the market is effectively on sale. Take advantage of this time by putting away some of your stimulus check in a long term account. As volatile as the market is right now, putting it in a long term account effectively absorbs the ups and downs, assuming the market is healthy by the time you do plan to retire.
Find a need. While the Government busies itself with infusing the healthcare system and other massive components of our economy with monetary stimulus, you now have an extra $1200 or so to meet a need that our politicians can’t necessarily see. The State has entrusted you with this money to meet an immediate need in your area. Check out this GoFundMe page with opportunities to help a business near you. Giving away a portion of your income helps you have a better attitude about the role of money. When we freely give something that’s given to us, we can begin to detach our sense of well-being and worth to fiat currency that is merely one representation of value.
Let yourself blow 10%. Within reason, allow yourself to have fun with a small portion of what you’re about to receive. As important as savings and frugality are, give yourself permission to make a small splurge that you might not have otherwise. Money management need not be completely about retirement accounts and budgeting for groceries. Once in a while, a responsible splurge for, say, a high quality bag of coffee, a new video game, or a useful kitchen appliance, shouldn’t be completely out of the question.
Remember that true wealth isn’t a number on an account, but rather the value you bring to your work and relationships that lasts a lifetime. No moth or rust can ever take that away. While you build your legacy, leave behind healthy approaches to your finances. You might be surprised how little steps now lead to exponential payoff years from now.
For more practical and approachable money and finance advice, check out the How To Money website and podcast.
Marcus Farris is the Veteran Wellness Coordinator at Mission 22. He’s a Certified Health Coach and Level 1 Crossfit Trainer.