How to Save Money and Stay Financially Fit
Balancing expenses and the need to save money can be challenging. Sometimes you may find yourself needing to spend more than anticipated due to unexpected costs, from repairing a car that breaks down suddenly to dealing with a medical emergency that results in a hefty hospital bill. But just as little steps can ensure you stay physically fit without resorting to a crash diet, there are ongoing steps you can take to learn how to save money and remain financially fit in spite of occasional setbacks..
1. Create a savings plan – and start small. The path towards financial wellness begins with setting goals. If this is your first savings goal and you set it at one million dollars, you are unlikely to feel any sort of accomplishment when it takes you years to even reach 5% of that amount. Here the diet analogy relates perfectly: trying to lose too much weight too quickly is unhealthy and will likely result in failure..
Financially, you should start with goals you can accomplish within the year, and if you do not have an emergency fund yet, start there first. Making sure the automatic deposits or transfers you set up for savings are manageable and included in your budget is important, because you are setting yourself up for failure if you will need to stop those deposits for any reason, and only the most savings-conscious people are likely to start them up again once stopped..
2. Be mindful about your spending and purchases. Do you really need that second cup of specialty coffee today – or that new pair of shoes? Monthly, you should be reviewing your statements and account history. Did anything show up that you don’t recognize, or did you get charged an incorrect amount? You should also review your budget each month to ensure you have paid all your bills and didn’t miss anything. Annually, you should review your budget to make sure it is accurate and look to reduce costs if you’re running a deficit. You should also review your annual subscriptions to make sure they’re not negatively impacting your money for little enjoyment. Just how many streaming services do you need – and where do they overlap with cable TV?
3. Speak with your financial institution about how to save money. Never hesitate to talk to your financial institution any time you have a question, especially if you’re an Affinity member! If you haven’t had an in-depth conversation about your current and future financial needs in the last year, you should schedule some time to sit down and go over your accounts, loans and upcoming needs. There may be better accounts, services or rates than what you currently have, and a simple conversation could help you save or earn some additional money. A simple conversation can help get you ready for your financial future with informed decisions.
4. Make use of online banking and budgeting apps. Online banking and budgeting apps can help keep you aware of what’s going on with your finances. Just as you track your calories and weight on a regular basis when you’re on a diet, you can track and monitor your income and expenses when you are trying to be financially fit.
Budgeting apps make this process even easier by helping to categorize your expenses with little work on your part, but if you don’t regularly check your progress against your budget, your plan isn’t helping. Unless you know where every cent you spend is going, you should check in on your spending weekly to make sure you’re on track, and even if you do, it can’t hurt to double check and make sure there’s nothing you need to investigate or dispute. Having all this information conveniently on your smartphone makes all this much easier. For more information on this tip, see the Affinity blog post “3 Ways Apps Can Improve Your Spending Habits and Cash Flow.”
5. Be smart about your debt. Believe it or not, there is such a thing as a healthy level of debt. But not if you can only afford to make minimum payments and all your interest rates are in the double digits. If you know you have made any substantial improvements to your credit in the last 6-12 months, you should consider if refinancing or debt consolidation are options that can help reduce your interest rates, and in turn, how much interest you’re paying. If you’ve explored these options before but your debt to income ratio was an issue, you may now qualify if you’ve paid down your loan balances or increased your income.
You should consider having a conversation with a representative, credit counselor or favorite trusted financial guru first before you apply for these loans. With every application submitted is a hard inquiry on your credit and a few points’ reduction. So, you want to make sure things have changed enough, or you’ll save enough, to make the impact to your credit worthwhile. If you don’t know what your credit score and report look like, checking it is an annual habit you should adopt. Reports are available from all 3 credit bureaus for free via annualcreditreport.com1, and Affinity provides member’s their FICO score for free through online banking, updated quarterly.
To finish up by returning to the physical health analogy, all these tips will allow you to continuously “check up” on your financial health – daily, monthly and yearly. Small steps plus diligence is what leads to a healthy mind, body and deposit account!
To finish up by returning to the physical health analogy, all these tips will allow you to continuously “check up” on your financial health – daily, monthly and yearly. Small steps plus diligence is what leads to a healthy mind, body and deposit account!
Take the first step in financial fitness by joining our Great Savings Challenge!
1 Retrieved from https://www.annualcreditreport.com/index.action
This information is for informational purposes only and is intended to provide general guidance and does not constitute legal, tax, or financial advice. Each person’s circumstances are different and may not apply to the specific information provided. You should seek the advice of a financial professional, tax consultant, and/or legal counsel to discuss your specific needs before making any financial or other commitments regarding the matters related to your condition are made.