In this week’s Tuesday’s Tips, I share some financial advice to help you reduce spending. Please watch the video below to learn more. If you would like a free review of your current financial situation, please use this link to schedule a free call.
An edited transcript follows:
Hi. Phil Weiss of Apprise Wealth Management with another edition of our Tuesday Tips.
This week: some financial advice to help reduce spending.
If you think about a financial plan and how to maximize how much you have left for retirement, there are a few things that you can do. You can work longer, you can make more, or you can spend less. Today we’re going to focus on the last one of those options, which is spending less.
This doesn’t mean that I’m telling you not to buy a special cup of coffee, or to not spend money at all.
This is looking for ways that you can cut out spending that just doesn’t really matter to you. In other words, you can reduce spending on things that don’t bring you joy.
Financial Advice to Help Reduce Spending
The first part of this process is:
1. Pay Attention to your Spending.
Some people might think this means budget. A lot of people don’t like that idea. You don’t necessarily have to budget, but you should track your spending. You should know what you’re spending. For example, reviewing your credit card bills.
I remember when I bought my first home, I wasn’t sure if I could afford it, so I carried a card around with me and tracked every penny that I spent. I wrote down how much I spent and what it was for. Then, after several weeks, or about a month, I put that information into a spreadsheet so I could see where my money was going.
Doing that helped me realize that there were lots of things that I could cut out, especially if time got tough and I was worried about making my mortgage payment.
It made me a lot more confident that I could buy my first home.
At least track your spending. You can do that by reviewing your monthly credit card bills.
That leads to the second piece of financial advice to help you reduce your spending. Now we want to look for needless spending.
2. Look for Needless Spending.
A really good place to start is reviewing your subscriptions. Today, you have so many things you subscribe to. You pay for your phone, you pay for streaming services (that could be TV or video related, it could be audio related). There are plenty of other subscriptions we have.
Are you still using them all? If you’re not, think about ending your subscription. If you’re not using it, you’re just giving the money away.
Also, take a look at what you’re spending and see if it’s something that’s necessary or a necessity. Those you can’t really cut out.
Paying your monthly mortgage or your monthly rent may not make you feel that great, but you have to do it. Putting gas in your car, you have to do it if you need to get to places like work, you need to get to the store to get food. But there are other things that we spend our money on that may not bring us joy. Think about trying to spend with purpose.
At Apprise we do life planning, and one of the purposes of life planning to me is that it’s a good way to help you better align your spending with what matters to you.
That’s what reducing or looking for need with spending is about.
Getting rid of that spending if it doesn’t bring you happiness it’s not in line with what matters to you.
The next item of financial advice we have to help you reduce spending share relates to your savings:
3. Automate your Savings.
I like to think of this as paying yourself first. The first thing I think of with that is this: If you have a 401(k) at work and you want to participate, make your contributions automatic. Have some money come out of your account through payroll deductions. It can go into different savings accounts on a regular basis.
If you find some spending that you can eliminate, don’t just think about spending it on something else. Instead, you can automatically increase how much you’re putting into your savings account or your retirement plan. Whatever you choose, you’re going to be in the same place in the end if you save money that you used to spend. Unless you’re just looking to cut spending because you’re spending too much. For example, if at the end of the month, you don’t have anything left, and you have credit card debt or something like that. That’s different. Then you want to take those savings and use them to pay down debt.
But if you don’t have debt and you’re in that fortunate position think about how you can use that money to increase your savings.
The last piece of financial advice to help reduce spending relates to repeatability.
4. This isn’t a One-Shot Deal.
You want to do these things on a regular basis. It could be monthly; it could be quarterly. But I wouldn’t think it would be less often than that.
You want to review those credit card bills when they come in. Look at your bank statements. Find out where you are spending money on things that don’t matter to you. What can you cut out?
If you take these steps, you can do something that can benefit your future, because you can cut your spending. Cutting spending is one of the ways that you can increase your wealth.
Remember I said up front you can either work longer to increase your wealth and your chances of maintaining your lifestyle in retirement. You can try to make more money, or you can lower spending.
I hope you find this week’s Tuesday tips helpful. I will be back next week with Apprise’s five favorite reads of the week. Have a great day.
Our practice continues to benefit from referrals from our clients and friends. Thank you for your trust and confidence.
We hope you find the above post valuable. If you would like to talk to us about financial topics including your investments, creating a financial plan, saving for college, or saving for retirement, please complete our contact form. If you do, we would be happy to have a conversation. You can also schedule a call or a virtual meeting via Zoom.
Phil Weiss founded Apprise Wealth Management. He started his financial services career in 1987 working as a tax professional for Deloitte & Touche. For the past 25+ years, he has worked extensively in the areas of financial planning and investment management. Phil is both a CFA charterholder and a CPA.
Located just north of Baltimore, Apprise works with clients face-to-face locally and can also work virtually regardless of location.