1. Paying Too Much on Housing
Since housing is likely your biggest monthly expense, this is where you can really make or break your budget. Personal finance experts recommend spending no more than 30% of your income on housing. You can spend even less and save more by getting a roommate or moving to a different neighborhood or a city where it’s easier to save money. Of Course this is easier said than done in Boston and surrounding towns. TRUE STORY: Consider living with family if roommates are not an option. Don’t try to live for free but rather, share the expenses so that you are helping with their financial burden but it is still cheaper than renting on your own. Give yourself a HARD deadline on when you need to move out to hold you more accountable.
2. Spending Too Much on Car Costs
Aside from housing, transportation is likely your next biggest expense. Buy a reliable and affordable used car, try to live close to where you work, and consider taking public transportation to cut down on gas and maintenance costs. If you work downtown, living close to work is an unlikely solution. Consider living close to public transportation, carpooling, biking?
TRUE STORY: My cousin realized he was paying more owning a car (car payments, insurance, gas, maintenance, parking) than utilizing public transportation. He sold his car and takes the train to work daily and utilizes Uber and zip car on the weekends if he has a lot to do. This strategy helped him save for an engagement ring and wedding.
3. Not Planning Meals Ahead of Time
Keep your grocery budget under control by planning out your meals and shopping accordingly. One of my favorite meal-planning apps comes from Food.com. It combines meal planning and money saving all in one app. If you like to live on the adventurous side, consider Daily Table, a non-profit grocery store that has discounted food items to help you stick to a tight budget; the catch… food items vary weekly so you will have to cook based on what you buy as opposed to buy what you plan to cook.
TRUE STORY: A friend purchases prepared meals from Daily Table and says it is really good. The price works for her budget where she can have a nutritious meal (not prepare lunch herself) for a lot less than cooking when she considers her time and money to prepare a meal for herself.
4. Buying Coffee or any other vice
America’s love affair with coffee shows no signs of slowing down. ABC News reports that the average American worker spends $1,100 a year, or $14.40 a week, on coffee. I don’t know about you…but that’s a lot of money spent on a drink. That’s down payment money or debt reduction money in the mind of someone who’s actively trying to build wealth.
TRUE STORY: Be real with yourself, maybe don’t quit cold turkey but try to reduce the number of coffees you buy by 2 each week until you are bringing all beverages from home. I weaned myself off of Orange Fanta… that was my vice. Saved a lot of money, water with lemons was my alternative. Now, I don’t crave drinks when I eat out, I can have a water with lemons alongside my meal.
5. Carrying Credit Card Debt
Credit card debt is one of the most expensive types of debt you can carry. Those minimum payments might seem low now, but they can cost you hundreds to thousands of dollars in interest. If you have credit card debt, make a debt reduction plan. For example, try transferring your balance to a low-interest credit card, and commit to paying it off for good. Even if you can’t pay more than the minimum EVERY month… whenever you are able, try to make additional payments.
TRUE STORY: Even paying $20 extra a month helps you save. Also consider calling your credit card company every 6 months (if you have a history of on time payments) and request a rate reduction. I do it yearly and it makes a difference in the long term.
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