ON BUDGETING || 5 Ways to Improve Your Financial Well-Being
Financial well-being is a crucial aspect of our overall quality of life.
It's not just about accumulating wealth, but also about effectively managing the resources we have to ensure a secure and stable future. One of the most fundamental tools for achieving financial well-being is budgeting. Budgeting helps us allocate our income wisely, prioritize our expenses, and save for our goals.
Let’s discuss 5 effective ways to improve your financial well-being through better budgeting practices.
1. Track your spending. The first step to curbing unnecessary expenses is to know where your money is going. Track your spending for a month or two to see where you can cut back. There are many different ways to track your spending, such as using a budgeting app or simply writing down everything you spend. The Mint: Budget & Expense Manager App is a great tool to use if you’re looking to create and manage budgets. It can even keep all your information concentrated together, so you don’t need to download multiple apps for multiple purposes. Some banking apps also provide a quick overview of how much you are spending compared to the previous month to alert you when you’re overspending.
It’s good to sit down and separate your spending into categories. Which expenses are under automatic payments? How much do you usually spend on groceries vs. eating out with friends and family? Laying out your expenses visually will give you a better idea of how to budget and what unnecessary costs you can cut.
2. Set a budget. Once you know where your money is going, you can set a budget to help you stay on track. Your budget should include all your income and expenses so you can see how much money you have left over each month. When you budget, always remember to leave money for emergency expenses. It’s always better to be overprepared than underprepared.
3. Avoid impulse purchases. One of the easiest ways to spend money unnecessarily is to make impulse purchases. When you see something you want, it's easy to buy it without thinking about it. To avoid impulse purchases, wait 24 hours before deciding to buy something. Think about if you need this product for the future. If it is not an absolute need and just something you would like because you are going through a phase, take a while to sit on it before making the purchase. If you are still thinking about buying it after 2 or 3 weeks, it may be something more of a “need”.
Food is a big part of our lives. Sometimes, we crave certain foods that we think can only be eaten at restaurants. But if you really think about it, some of those recipes can be recreated at home, and it’ll even be therapeutic to experiment and cook at home.
4. Cook at home more often. Eating out can be expensive, so cooking at home is a great way to save money. There are many easy and affordable recipes that you can find online or in cookbooks.
5. Cancel unused subscriptions. It's easy to forget about our subscriptions, but they can add up over time. Look at all your subscriptions and cancel any that you don't use.
The average person spends $5 a day on coffee. That’s a lot of money if you get coffee 5 days a week for the entire year. You could save so much by making coffee at home; it’ll taste just as good!
Here are some additional tips to help you curb unnecessary expenses:
Bring your coffee to work instead of buying it from a coffee shop.
Pack your lunch instead of eating out.
Take public transportation or walk rather than driving.
Shop around for the best deals on groceries and other necessities.
Look for ways to save money on entertainment and leisure activities. A hike or a bike ride costs nothing.
By following these tips, you can easily save hundreds or even thousands of dollars each year. This extra money can be used to pay down debt, save for a rainy day, or reach your financial goals and overall quality of life.