These budget moves pack a big punch.
The idea that your morning coffee -- or avocado toast -- purchase is what's preventing you from becoming a millionaire is a personal finance "truthism" that's existed for decades. And, yes, while opting to brew weekday coffee at home could save you $1,000 per year, there are other ways to adjust your spending that make a bigger impact. For some people, that daily coffee run is what makes the workday bearable, so why skip it? "I know a lot of people who, without that bagel and latte that morning, are miserable people," says Douglas Boneparth, president of Bone Fide Wealth in New York City and co-author of "The Millennial Money Fix." "You want to do the things that are as productive as possible." Read on for other ways to build your budget while still being able to splurge on the luxuries that bring you joy.
Reconsider your housing costs.
For many people, housing is a major expense, and cutting back can be a once-per-year decision instead of a daily exercise in self-denial. You can be as extreme or as moderate in cutting back on living expenses as you'd like. On the intense side, you might move back in with your parents, downsize, move to a different city or take on a roommate. On the milder side, you could choose to move to a lower-cost neighborhood, consider refinancing your mortgage while interest rates are still relatively low, argue against an overvalued home tax assessment or rent out a room on weekends through a vacation rental site such as Airbnb.
Tweak your daily transportation method.
Like with housing, this budgeting move can be as drastic or measured as you need it to be. Some people save hundreds of dollars each month by ditching their car and relying on public transit, biking or walking. You may also consider gentler changes, such as buying or leasing a cheaper car, walking for part of your commute, carpooling or arranging a few work-from-home days per week to reduce commuter costs.
Consider a side hustle.
If life without avocado toast sounds bleak, brainstorm ways to make more money. A side hustle might include driving your car for a ride-hailing service, working nights or weekends at a bar or taking on seasonal work during the holidays. If you have teenage children, consider helping them find a part-time job to cover their entertainment expenses. The options are limitless, especially in today's digital gig economy, where you can easily make money online as a mystery shopper or a panel member.
Increase your income.
If your paycheck is so thin that a daily coffee run is nearly bankrupting you, it might be time to reconsider your job and worth as an employee. Scoring a new job is a big change, but it's a one-step way to potentially add thousands of dollars to your bottom line. If switching companies won't do, consider positioning yourself for a raise or promotion at your current gig. Maybe you can take on additional training to score a pay increase or have a sit-down chat with your boss, asking what you can do to earn a raise and continue moving up professionally and financially at your company.
Cut the cord.
If you want to continue paying your monthly coffee bill, it might be time to nix your monthly cable television subscription. Many families could save money by cutting the cord and using a range of less-expensive video-streaming services to cover their television-watching needs without sacrificing those lattes.
Rethink your goals.
If you're denying yourself every little luxury because you have an ambitious saving or debt payoff goal, it's perfectly OK to rethink the timeline or strategy you're using to meet that goal, Boneparth says. Managing money is a lot like managing your weight, experts say, and sticking to a goal that's too restrictive might cause you to give up things that make you happy and healthy or lose sight of your overall financial health.
Check your credit.
If you're looking to stop spending money on unnecessary costs, then finding a way to reduce interest payments, which are lining the pockets of your creditors and bank executives, is a powerful way to do it. Take steps such as reducing your credit-utilization ratio and making on-time payments to improve your credit score before taking on new loans or renegotiating existing loans.
Downgrade your vacation.
You can have your latte -- and stick to your budget, too. But you're going to have to make some trade-offs. Today's culture of lifestyle and travel blogging makes it look like you can't have a meaningful vacation unless you venture halfway across the world. Save thousands of dollars each year by arranging staycations or exploring close-by cities or towns with cheaper travel and lodging costs.
Talk to a professional.
Yes, this will actually cost money. But if your budget is so tight that you can't even afford a daily luxury, it might be time to schedule a one-time sit-down with a fee-only financial advisor, who can help you understand why your dollar isn't stretching as far as you'd like. Perhaps you're overpaying for insurance or your housing costs are totally out of whack with your income. A professional might be able to help you identify the major changes you need to make to get your finances back on track. If you don't have the funds to consult a professional, do your research on a site such as U.S. News & World Report's My Money blog or read a financial-planning book.
Spend on what's important to you.
Budgeting is all about trade-offs. If you really want that around-the-world vacation, maybe you do swear off that daily latte for a year. If small luxuries help you get through an otherwise stressful workday, you might want to spend on those and consider moving to a cheaper neighborhood. If your spending plan isn't making sense and you're not making ends meet, Boneparth says, "The one thing you can't do is complain and keep your behavior the same."
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