How to maximize spending

Nov 30, 2018Reading Time: 5 min

A new year is right around the corner. This is your opportunity to organize your finances and get your financial life on track. If you’re ready to revamp your finances here’s how to maximize your spending in 2019.

Get organized

First things first. Before you can get your finances heading the right direction you need to get organized. It’s challenging to achieve your goals when you have no idea of what’s coming in and going out. You need to understand where you’re starting so you can review and evaluate your progress.

So, gather all of your financial documents. This may include investment accounts, bank statements, any bills, and more. Then you want to organize everything by a specific category. When it comes time to review your finances you will then know exactly where to find your documentation.

A great way to organize your finances it to create a folder for each category. Then place these folders in a filing cabinet for easy access. You may also want to consider purchasing a filing cabinet you can lock. This will keep your financial documents personal.

Create a budget

Once you have gather all the documents you need, create a budget. Review what’s going in and what’s going out. How much are you making? Where is that money going?

You may want to create a spreadsheet of all of your income and expenses. Make sure to include everything your pay monthly as well as annually.

For miscellaneous expenses you may want to track them for a few months to monitor your spending habits. This will help you determine a how much money you may be wasting.

Set goals

After you have created a budget set goals for the new year. Take some time and truly evaluate what you want. Do you want to purchase a new home in 2019? Or do you want to take a trip to Florida in the summer? Whatever your goals are, make them as specific as possible and write them down.

Long-term and short-term goals can help you on your way to achieving financial security.

Get out of debt

One of your goals may be to get out of debt. If debt is weighing you down, it may be time to kick it to the curb. Review all of your revolving debt and create a running total. This will help. You stay organized and know what you owe.

After you have made a list of all your debts, make a plan of action. How are you going to pay off your debt. It may be a good idea to look at your budget and see if you have any extra money you could put toward your debt.

For example, let’s say you have an extra $200 in your budget you can put toward your debt repayment. You can decided to focus on repaying one revolving balance first or maybe the debt with the highest interest rate. Whatever you decide make sure to continue minimum payments on all other balances.

Cut your expenses

One of the best way to maximizing your spending is to review your expenses and see where you can cut back. You may be paying for subscriptions or services you don’t even use. What’s the point of spending money if you’re not using the service.

Review you budget and look for ways you can cut back. It may also be helpful to reach out to some of your service providers and ask for discounts. A lot of times they will offer you a better rate because they want to keep you as a customer.

Build an emergency fund

Accidents happen and they can end up costing you money. If you don’t have anything in a savings account, you may want to start putting some money aside. You don’t want to go into debt to pay for a $500 car repair.

It’s recommended that you have an emergency fund of at least 3 to 6 months of your expenses. This will create a good cushion in case you were to lose your job or need money fast.

Eliminate poor financial habits

Do you enjoy heading to your local coffee shop every day before work? If you have a financial habit that’s costing you, you may want to take action right away. If you spent $10 every time you went to your local coffee shop and went 5 times a week. That would equate to $2,600. Imagine all the other ways you could better spend that money.

You poor money habits may not be obvious. So, take some time and record everything you buy every day, month, and year. This will help you determine areas where you may need to cut back.

The bottom line

Make 2019 your year to get your finances on track. With a little bit of work, you will achieve all of your financial goals in no time.