I bet you think summer is the worst time of year to buckle down and save cash. Disagree. I realize it’s when people tend to be the most active and yes, that can mean the credit card gets and stays pretty hot. But I would argue that nice weather provides a plethora of activities that don’t cost much at all.
Patio dinners. Street Festivals. Outdoor concerts. Workouts with pals. Summer in the city is the perfect time to commit to saving money and set yourself up for success this fall. I know, you don’t want to think that far ahead yet! Neither do I. But when it comes to personal finances, we should always be thinking ahead. Like years and years ahead.
But, you have to start somewhere, right? Here are five ways to shift the way you think about your money and can help you feel empowered and on the road to financial freedom.
- Budget, budget, budget. In order to save, you need an understanding of how much is coming in, how much is going out and when. Organizing regular expenses in an Excel spreadsheet is quick, easy and a gives you a visual understanding of where your finances sit. I organize mine by fixed living expenses, fluctuating living expenses (think gas/electric bills, groceries, etc.) and additional costs (where I put hair cuts, birthday gifts and other costs for special occasions).
- Think about growth. No one wants to live month-to-month for the rest of their lives. Now that you have a monthly budget, it’s time to think about how you’re going to grow your wealth. Yes, your earning potential will continue to increase as your career progresses. But saving alone is not enough. How will you grow those savings? Should you invest? Are you contributing enough to your 401K? These are important questions to ask and avenues to pursue when you’re young so you can get ahead of the game!
- Actively track spending. It’s incredibly impactful to see how you’re spending that paycheck. You might be shocked at how much is going out the door when you hit up Whole Foods or more damaging yet, wander aimlessly around Target (yes, there may be some self referencing going on here). The good news? There are great apps that can be synced to your checking account and offer an accurate view of how much you’re spending and when. One of my favorites is Mint – it has tons of great features and visuals that can help you better understand your cash flow. Warning, it may be a bit sobering to use.
- Interrogate yourself. I let online purchases sit in my cart for days. During this time I ask myself a million questions including the obvious, do I really need this? To the not so obvious, would I rather have this top than go to that fancy dinner with friends next month? Is this purchase more important than the dream home I’m saving for? How is this item going to help me get closer to a specific goal or dream? You will be surprised with how many reasons you have not to swipe your card!
- Do a closet audit. Mastering your finances is about more than budgets and tracking spending. You should have a total picture of how much all your assets are worth. There might even be some cash sitting in your closet. Take stock of your wardrobe and filter out any waste. Have you worn it in the last 6 months? If not, it’s got to go. And if you’re filtering it out, why not see if you can get any extra cash for it! Thred Up is an online thrift store. Sign up and they send you a bag to fill with clothes and send you cash when you’ve sent it back full of items that are in good shape. Not only is your closet and life now more streamlined, you’ve got a little extra money in your pocket. Why not?