Today. Today is the best time to improve your finances.
If you’re joining me in a no spend month, it’s the perfect time to tackle those financial tasks you’ve been putting off. Even if you’re not doing a no spend month, there’s no time like the present. Pick just one thing to do this week, commit and follow through.
Track Your Spending
I started tracking our spending (down to the penny) after reading Your Money or Your Life. Nothing has helped us control our finances better than tracking our spending.
A no spend month is the perfect time to start tracking your spending and expenses. Emily over at JohnJaneDoe said her no spend month was the opportune time to start tracking expenses since she didn’t have as many expenditures to record that month.
How you decide to track your spending is up to you. And you might have to try a few different methods before you settle on one that works.
For years, I’ve been using my own trusty spreadsheet, but I also use a couple of the methods mentioned below (Overkill? Maybe, but it works for me!).
Here are a few spend tracking options:
Start a spending journal. Do you get to the end of each month and wonder where all your money went? The spending journal can help you answer that question. This is the easiest way to see patterns and leaks in discretionary spending.
My awesome friends, Mr. and Mrs. Groovy, have this expense tracking tool they use to track their expenses. Try it out – it’s free!
Start spend tracking and develop a budgeting system simultaneously with You Need A Budget (YNAB). My friend, Linda, at Brooklyn Bread says YNAB helped her get her finances and spending under control. It’s less a budget, and more a tool for giving “every dollar a job”. Check out my review (and get three months free).
Personal Capital offers so many great financial tools – and they’re free. I use the net worth and expense tracking tools. Really, after you get the initial set-up completed with Personal Capital, they do the rest for you (the only thing you may want to do is re-categorize some of your spending).
Calculate Your Net Worth
Why is net worth important? Net worth is the big picture. It’s the complete report of your current financial health. Your month to month finances don’t tell the whole story.
Calculating net worth can sound complicated, but the math is actually quite simple.
Assets – Liabilities = Net Worth
Assets are the things you own. They include things such as your house, car, checking and savings accounts, retirement savings, and any other items or accounts you have of any value.
Liabilities are what you owe. This includes any loans, such as your mortgage, student loans, credit card balance, auto loans, HELOCs and any other money you owe.
You may not like what you see, or you may be pleasantly surprised. Either way, being in the know is the best way to gauge what you need to do to improve your situation. Having that big picture can provide the motivation you need to eliminate debt or save even more.
Side note: Alan and I first learned about our net worth 18 years ago when a mortgage lender informed us it was negative.
Lower Your Expenses
I know $20 a month doesn’t sound like much, but that’s $240 a year. If you cut 5 expenses by $20/month, you will save $1200/year. What could you do with an extra $1200 each year?
Lowering recurring expenses, such as phone bills, cable, insurance, or bank fees can save you a ton of money. Go through your bills, look for “extra” charges, and call companies to request a lower rate and eliminate the extra charges.
Don’t forget about those subscriptions and memberships! Are you getting the full value out of them? Do you use the gym enough to justify the cost? Do you read that magazine each month? Do you play that online game anymore?
With the New Year is a chance to reset your spending and expenses.
Now is the perfect time to start the 6 Weeks to $500/Month Savings Challenge.
Automation works! Set up designated savings accounts for your money goals. Whether you want to save for a vacation, big insurance bills, or a house down payment – automatic, monthly transfers into a savings account will do the job.
Do you have a $2000 insurance bill due each year (I do!)? Set up an account specifically for this expense and send $167 to that account each month. I use Capital One 360 for this – it’s easy to set up and you can automatically set your goals for each account.
Even when I thought I was saving all I could, Digit proved me wrong. I signed up for Digit in June of last year and have saved over $1700 so far. I don’t even miss the money in my checking account. The app uses algorithms to take small amounts out of your checking account and deposits them into a savings account for you (without worrying about overdraft!).
Clean out, declutter and sell something. If you want/need to spend on something during your no-spend month, why not side hustle a little to have some money to spend!? And, you’ll have clean cabinets and closets. Win-win.
If you haven’t already, set your goals for 2017. Don’t just say what your goals are, really plan out your goals and create accountability. And don’t forget to write them down!
If you aren’t participating in the No Spend Month, it’s not too late! Start when you’re ready! You’ll learn all about your spending habits and save money to boot!
You may not consider a No Spend Month all that “fun”, but it’s incentive to try out new things. Read a book from the library, take a hot bath, get creative with a project or play a game of cards with your partner! Need more ideas? Check out 35 things to do when you don’t want to spend money.
How will you start working on your finances today? What’s the one thing that has helped your finances the most?
This post contains affiliate links, which means that if you click on one of the product links, at no additional cost to you, I’ll receive a commission if you buy products through these links. See the full disclosure here.
Centsibly Rich is a participant in the Amazon Services, LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Amazon.com.