By Matthew Glatt – CPA, Founder, and CEO of FLP Financial Group, LLC
Do you know where your money is really going? What are your top spending categories? You may be shelling out more money on entertainment, food, technology, housing, and recurring costs than you realize. Avoid these five money traps to save big and put the cash towards financing your future.
Analyzing your spending over time can help you build financial awareness and pinpoint good and bad habits. But, it all starts with figuring out which areas you can cut back on. With my clients, entertainment is often an expense that goes way over budget. That is not to say you can’t indulge in entertainment. Seeing the occasional movie and rocking out at your favorite band’s show isn’t going to break the bank, but those expenses add up over time. Try swapping your usual movie date with a Netflix night at home to instantly save. Or, instead of a quick weekend getaway, try a “staycation” with a nice dinner out for a fraction of the cost.
2. Dining Out
Saving money on date nights is a start, but your foodie-tendencies may be getting your wallet in trouble. How much do you spend on eating out at restaurants? How often do you make meals at home? Dining out more often than not can chip away at your disposable income, but cutting back is an easy way to boost your savings and often boost your health too!
3. Technology Upgrades
We rely on technology more than ever and our devices are constantly being improved. Though tempting, buying the newest phone or tablet the minute it comes out can cost you thousands over the years. In order to keep up with the latest upgrades, you have to drop a lot of cash. Upgrade one year later and you may save up to 50%. Skip the constant hardware upgrades and watch the money you’ll save pile up.
Even those doing well for themselves have to be aware of every dollar they spend. Small but recurring costs, such as a newspaper subscription, premium cable package, unused gym membership, or wine of the month club are easy to forget about but add large monthly expenses to your budget. Preparing an inventory of your recurring bills will help you see what is essential and what you can cut.
Trimming spending around non-essential items is pretty simple, but keeping a roof over your head is a necessity. Housing, whether it is rent or a mortgage, takes a significant chunk of our paycheck every month. On average, you should be spending no more than 30% of your monthly income after taxes on rent or your mortgage. Though it is difficult to think about downsizing your home in the name of saving money, spending less on housing can considerably free up your budget. Take a look at not only your housing costs, but mortgage insurance, homeowners insurance, and other maintenance costs that you may be able to reduce.
How We Can Help
Does thinking about your spending cause you major anxiety? Our Spend with C.A.R.E. program is the answer to your budgeting prayers. Our signature program gathers data on each dollar you spend and categorizes expenses based on a proprietary tool used to analyze your spending habits. We look at it all, from big recurring expenses like your car payment to your weekly Starbucks treat.
Once we have captured months of data, we analyze your spending habits to identify patterns and pitfalls in how you currently spend your money. Using this information, we develop a specialized plan to address areas where you can adjust spending and we create a roadmap to help you pursue your financial goals. The result is often a greater awareness and sense of control over where your money is really going.
Get Started Now
We are ready to help you take control of your finances. Start getting a better grasp on your financial health by downloading our free Back 2 Basics guide for tips on improving your financial well-being, reducing debt, and increasing your net worth. Call today to set up a meeting with a financial advisor and learn how you will benefit from our Spend with C.A.R.E. program.