The holidays and the new year are a time when everyone seems to be looking for a better way to handle their finances. Spending gets out of control near the end of the year, and in the cold months of January and February, reality hits.
If you’re looking to start off the new year with a new bag of budgeting tricks, here are a few life-changing methods for making the most of your money, and keeping your spending under control.
The envelope method. This is a fun, low-tech budgeting option that’s been popular for years. If you haven’t tried it, just commit to one month and see how it goes. It could be eye opening! Here’s what you do: write down all the things you spend money on in a month: rent or mortgage, gas, groceries, going to the movies, clothes, etc. Now figure out how much you usually spend – or want to spend, or can afford to spend – in each category. Put that amount of cash in an envelope (yes, an actual paper envelope) and label it. Now, spend the money over the next month. When it’s gone, it’s gone. If you pay a bill online or by check, just deposit that amount of cash into your account to cover it. This is a hands-on way to figure out if you’re staying on budget, and give you consequences if you’re not.
Try an app. Once you’ve tried low-tech, you’ve got to try high-tech. Download an app like Mint, and use it to track your spending. These apps can access your credit card and bank accounts if you give permission, so you see your money moving in real time. They have tools and charts to give you a good visual grasp of your accounts, and let you play with different spending scenarios. You might find one that you love.
Give yourself a paycheck. Use credit card rewards to “pay” yourself and reward yourself for your good budgeting work. Spend money strategically, to get the most points, miles, and cash back, and then redeem your credit card rewards with the sole intent of treating yourself. You’ll be less tempted to blow your budget in other ways when you have a built-in rewards system of your own.