Is money a little tight? Hoping a raise will come through soon? I hate to burst your bubble, but a raise probably won’t do much good, even if it is exceptional. By the time a raise is adjusted for taxes, you’ll be lucky to see half of it in your bank account. And if that’s not bad enough, it’s a common problem that when you earn more, you automatically spend more. Reckless spending can consume a lot of cash fast.
The degree of reckless spending seems to rise in direct proportion to income. It won’t be long until you are back in your old financial rut, barely getting by. Sadly, more money will never be enough until you get serious about your spending.
The secret to getting cash inflow to exceed outflow is to reduce the outflow. That is a solution available to almost everyone.
Cutting expenses is not at all difficult once you understand it is like giving yourself a tax-free raise. Every dollar you do not spend is another dollar in your wallet. Or bank account. The challenge is to find realistic yet painless ways to trim spending without creating drudgery or removing the fun from your life.
Even if you do not have a job, you can give yourself a raise.
Live with Cash
Living with cash is a good way to curb mindless spending, except for payments you must send through the mail. It is not easy. In fact, it’s hard. But if you are willing to teach your brain and your attitude to treat this move as you would a job, it will become a very useful challenge.
Studies indicate that cash customers are more mindful of what they’re doing and spend a lot less than those paying with plastic.
- RELATED: How to Shop with CASH at Amazon
Limit ATM Trips to Weekly
Frequent trips to the ATM and or frequent swipes of that debit card tied to your bank account are like a small hole in the bottom of a boat. That constant leak can quickly lead to capsizing. Plug the leak by developing an envelope system for areas that can get out of control, like entertainment and fast food.
Place the amount you have allotted into an envelope and label it accordingly. Take the money from the corresponding envelope as you go to lunch or a movie. When it’s empty, the money is gone, meanings no more spending until the next fill-up.
Study your last bank statement, looking for subscriptions—like streaming services, music service, product and entertainment memberships, and other subscriptions.
Think: Which ones do you use most often? Which had you completely forgotten about? How could you replace it with a free (news, music, entertainment) service? You may be spending a lot each month on stuff you no longer use or want. By cutting unnecessary subscriptions, you can give yourself a small raise every month.
Unless you have a specific need and the money to pay for it, don’t wander through the mall or surf the Internet just to see what looks good. Remember this: A true need is never discovered while standing in a store. It is realized during normal living.
Use What You Have
Have you taken a look in your pantry and freezer lately? You may be surprised to see just how much food you have that is already paid for. Use it up before you make another trip to the supermarket.
Before you buy anything new, you should stop long enough to ask yourself this question: Do I already have something that will do just as well for now?
You’ll be surprised how many times the answer is yes.
Make it Automatic
A solid principle of life says if you don’t see it you won’t miss it. Use that principle to your advantage in building a nest egg. Fill out an “Automatic Deposit Authorization” at your bank or credit union, instructing them to automatically move $25 or $50 each week or two from your checking account into savings.
You might feel the pinch the first or second time that money disappears from your available balance, but soon you will not notice. You will not miss what you don’t see.
Pay off debt
If you’re rolling credit-card balances from one month to the next, you’re paying a lot of interest. Pay off those debts quickly, and do not replace them with new debt. The interest you no longer have to send to creditors is money in your wallet. Yep, just like giving yourself a raise!
First published: 10-09-18; Updated and republished 08-15-21