Most of us never think twice about spending a little extra on something special every now and then. Maybe you need a little pick-me-up after a stressful afternoon meeting, so you decide to buy a cup of coffee at that new shop down the street. It’s only $1.50. No big deal, right? Well, what if that special trip for coffee turns into an afternoon routine. Suppose you bought coffee four times a week? Before you know it, a year has passed and you’ve dropped $300 on your caffeine fix. And for those of us who prefer the more complicated coffee concoctions, you could be spending $725 annually before you know it!
Have you ever glanced at your W2 and wondered, aside from paying taxes, where all your money went? If you were to manage every one of your expenses in a program like Quicken or QuickBooks or even if you were to use an Excel spreadsheet, you would probably be surprised at just how quickly those little impulse purchases add up. Had you shown a little restraint over the year, you could have saved up enough for your next vacation or maybe you could have set aside a little bit more each month to fund your retirement plan.
Fortunately, it’s never too late to correct this type of bad spending behavior. All you have to do is take a closer look at your spending habits – especially the ones you have started taking for granted because you signed up for automatic payments. Then, simply identify the expenses you really don’t need. You will be saving money before you know it!
Not sure where to start? Take a look at these simple cost saving solutions for inspiration:
- Cut your land line. Instead, start directing all calls to your cell phone.
- Drop magazine or newspaper subscriptions that you don’t read.
- Use a water purifier rather than bottled water.
- Quit smoking to save around $1,700 per year (and significantly improve your health).
- Choose generic or store-brand items.
- Negotiate prices and ask for discounts when paying cash.
- Call creditors right away if you can’t pay on time.
- Check your bank balance regularly.
- Stay up-to-date on your credit score.
There are also many great tools available to help you along the way. For example, our personal finance calculators can help guide your savings strategy.
Making little changes in your spending habits can help you find more personal financial balance. Soon, you will be able to do things you once considered to be impossible, like pay off your debts, save for a larger purchase or simply give your emergency fund a little extra padding. Who knows, you could be one cup of coffee away from improving your financial future forever.
By: Trista Acker, CPA, CFP (Dublin office)