One of the things that my friends regularly do is ask me about what they can do to turn their money around. Most of them have lots of money coming in, but they are unclear about how to invest for growth. Or, they are living well under their means but they want more fun in their finances (less austerity, more joy). Still, some don’t have enough money but they are open to making changes that will allow them to increase their income, decrease their expenses, and start living the life they desire.
For that reason, I’m going to start sharing monthly tips to help with financial health. These are things that I’ve done, or that I’ve recommended, that have helped my friends to get more bang for their bucks, as well as created opportunities for them to grow their finances. For the month of August, I’m focusing on stopping the leaks, or reducing the unnecessary outflow of money. If you can stop costly expenses, then you can save more money and (hopefully!) create the kind of wealth that supports the lifestyle you desire. On that note, let’s look at three things you can do in August for your financial health:
- Review your withholdings and make appropriate adjustments. If you are a W-2 employee or 1099 recipient that has withholding calculated by the payer, then review your withholdings and see if you need to adjust them. If you tend to owe taxes when you file, then consider holding out a little more money as a pre-payment toward your tax liability. However, if you tend to get a refund (especially if it’s a large refund every year), consider having less money taken out of every check, so you end up having access to more of your money as you earn it. If you want some additional clarity on how to do this, I can make a guide for your convenience (just let me know in the comments below!)
- Request lowered interest rates on current lines of credit. You may be surprised at what your creditors will do for you, especially if you have a great payment history. Requesting lowered interest can mean more money in your pocket, so ask!
- Eliminate one (or more!) unused or underused subscription or membership. Last week’s post mentioned one way to save money on memberships, but if you have unused or underused subscriptions or memberships that you’re paying for, the best thing you can do is cancel them and save your money. But, along with canceling those subscriptions or memberships, immediately make a plan for what you’ll do with the money saved. If you don’t, that money will likely still be wasted.
A key point that is often missed when talking about saving money is finding the best way to use those savings. Most of the time, we think we will put that money into a savings account, which may grow and eventually offer a bit of a financial cushion. But the truth is, the money that is freed up by making small adjustments is often squandered. As soon as you know how much money you will save by making small changes, you should quickly designate where that money will go, and put that money where it needs to be without haste Will you put it into a savings account that has a higher yield? Get a clear focus for what that account is for, so that you aren’t tempted to spend the money whenever you’re feeling bored or frustrated. Will you put it in an investment account? Make it an account that makes it a little difficult for you to make frivolous withdrawals. Will you use it to reduce debt? Set up or modify your auto-payment, and increase your current payment account by the amount you’re saving by trimming expenses elsewhere.
Those are three tips (and actually, a fourth tip, too, if you include the savings designation idea!) that can be done during the month, to bring you a little closer to the financial condition you desire. Have a great day, and look out for more tips in the months to come!