By Marsha Barnes
While there is no perfect time to evaluate your finances or areas that could use a bit of work both personally or professionally, the top of a new year is definitely worth capitalizing on to make a few changes for a fresh start. Quite honestly, I can’t think of anyone that would purposely waste money. Often times, our actions are a reflection of a lack of planning from week to week or month to month—and before you know it, another year has come to an end.
As you consider how you may have wasted money last year, be sure to research where you actually spent it. You can easily find your financial truth in your bank or credit card statements. Allow each document to be the diary that you reflect back on when preparing to do things differently this year.
Here are a few ways to help you change course this time around.
Avoid goal setting and embrace what you visualize for your life.
As wonderful as goal setting sounds, it can bring about tons of anxiety when you feel pressured to reach these goals. Lean your thought process more towards evaluating what you visualize for your life as opposed to setting specific goals. If eating out truly brings you a sense of joy, the goal shouldn’t be to stop this behavior as an effort to prevent wasting money. Instead, try tweaking other areas that don’t add or bring value to your life. Pull out a sheet of paper and set a timer for one minute. Create a list of things you enjoy doing and another for things you spend money on that don’t add value to your overall happiness or lifestyle. Embrace what makes you truly happy by positioning your financial plans around your life and not your goals. Develop an actionable plan around what your dream life looks like.
Implement a non-essential spending limit.
Now that you are more aware of what your dream lifestyle looks like, it’s easier to determine how much money you need to fulfill those desires. The best way to stay on track while mapping out ways of plugging money leaks is to maximize a non-essential spending limit. The easiest way to do this is per week, per month, or based on your pay periods. Even the best intentions for a budget can go awry if you’re not clear on how much you spend each month for core desires (the things that you like to do), as opposed to your core essentials (the things you need to do). Try putting together a fun fund for random spending to help maintain a balance between your core desires and core essentials. This gives you the freedom to go out and have a little fun with your money without putting the money you need for essentials at jeopardy. Here’s a super easy way to implement this.
Take a look at your budget. After covering all your essentials, allocate a small amount of cash from your leftover disposable income to be used as your “fun money.” Remember that you don’t have to spend all of your earnings. Be sure to have a line item for where every dollar should go, and pinch off a small amount for you to splurge with. Consider the things that you do consistently each week. Some examples are visiting the bookstore for your favorite magazine, indulging in a bi-weekly brunch with your family or friends, or stopping for the occasional latte before heading into work.
If you don’t use it, lose it.
Membership and subscription services were intended to make life a little easier when managing our time and finances. Typically, these products help in the areas of saving more on the products or content that we use, read or study the most. However, there are many cases in which we may no longer need some of these services. Take a firm look at your bank or credit card statements over the past three months to determine how many times you actually used each of your subscription services. If the numbers are less than 5-10 days out of an entire month, consider cutting the expense. Remember, the goal is to avoid wasting money this year. As a suggestion, work on this activity during a weekend to have more time to review and cancel unnecessary subscriptions by contacting the vendors by phone or online. If you don’t use it, be sure to lose it.
Get to the bottom line of your numbers.
Determine a specific day and time each week when you will take a firm look at your finances. Time flies, and not allocating time for your money can quickly become a financial fire headed for complete disaster. If your money is getting the best of you, try a spending freeze for a month.
Here are a few ways to try doing this:
- Put away your debit or credit cards. Delete any information that you have saved in your browser to make shopping online more difficult.
- Understand the difference between your wants and needs. Focus on living a minimalist lifestyle for a period of time by living with less. This is a great way to appreciate what you have while ridding yourself of excess stuff.
- Stick to a shopping list. Place your focus towards only shopping for what’s on your list and this will become a habit that you can use for long-term financial success.
Identify ways that you have wasted money in the past by getting a handle on this area very early in the year. What will you do differently this year with your money to avoid wasteful spending?