Finances have a major influence on many aspects of life. 2024 internal data from Bank of America, the second-largest bank in the country, found that nearly 30% of households spend more than 90% of their income on necessities. Having little to no excess funds can take a toll on your well-being and relationships. 25% of married couples cite money as their main source of marital strife. Retirement is a primary concern with 53% of couples disagreeing on how much they need to save for retirement. Additionally, 47% of American adults rank finances as the top factor negatively impacting their mental health.
If you’re looking to improve your situation but don’t know where to start, you’ve come to the right place! The journey to financial stability begins with baby steps and developing good habits. Here are some tips that will help you put your budget to the test, make adjustments, and boost your savings rate.
track your spending
This is an essential step for creating and maintaining a successful budget. You need to go beyond passively monitoring bank accounts. Do a deep dive into your spending habits over the next few weeks and make a list or spreadsheet. What are your most expensive categories? Can you eliminate any of those costs? Pinpoint unnecessary expenses. It’s easy to underestimate how much small purchases add up or overlook areas where you might be overspending. Knowing exactly how much you earn and spend each month allows you to allocate funds wisely, avoid debt, and build savings for future needs.
eliminate unnecessary subscriptions
The beauty of subscriptions is that you set it and forget it. The forgetting part is also the downside. When’s the last time you scoured through your active subscriptions to make sure they’re still being used? Go through all of it— streaming services and channels, auto deliveries, online news subscriptions, phone apps, etc. It’s so easy to click a button to subscribe— especially when a free trial is being offered— but it’s not so easy to keep track afterwards. Reel in your spending with an autopay purge.
shop insurance rates
Insurance premiums for auto and homeowner policies are on the rise. You’d think this would prompt more people to shop around, but it’s an area that often gets overlooked. Commit to an annual check up where you use a comparison tool or request quotes from different insurance companies. Insurance is a significant expense for most households, so even a slightly lower rate can add up in the long run.
have a no spend month
This means no unnecessary purchases! Only spend on the essentials like bills, grocery shopping, gas, etc. This cleanse allows you to see how much you can save by forgoing things like eating out and online shopping. You might even be surprised by how little you missed those things at the end of the month. This isn’t about depriving yourself indefinitely— it’s okay to add items back into your budget if they’re worth it to you. This is simply a good way to boost your savings for at least one month and put the value of your wants to the test.
use your credit cards efficiently
The average American has about 4 open credit cards. Credit cards can be a great tool when used for purchases that are already in your budget if the balance is paid before interest hits. A major benefit of credit cards is that most offer rewards. Two common types of rewards are:
- Fixed percentages for cash back/reward points at places like gas stations, restaurants, or grocery stores
- Rotating categories that change monthly
Are you capitalizing on your rewards cards? Do you even know if your cards offer rewards? Go through each one and make sure you’re efficiently using them for necessary purchases. That last part is key. If you have a card that offers discounts toward an office supply store but you don’t need those items, we’re certainly not advocating for frivolous purchases. However, you might find that you’ve been leaving money on the table for things you do regularly buy.
If you have credit cards that aren’t earning rewards or some other type of benefit, this can be your next action item. Make a list of all your current issuers. Research their other offerings, determine if they have a card that would be more beneficial to you, then call the creditor and ask about a product change. Product changes simply transfer your existing account and credit limit to a different product within the issuer’s portfolio. It does not impact the age of your card or require a hard pull.
out of sight, out of mind
Redirect your paychecks so that a portion is automatically deposited into your savings. Parting ways with your money is harder if you’re in control of transferring it. Also, consider opening an account at an institution other than your normal bank, that way it makes it more difficult to access. If you can instantly transfer your savings with the click of a button, this setup becomes far less effective. You have the best odds of letting your savings accrue if you never see that money in your checking and have to jump through extra hoops to get to it.
These tips may seem basic, but building a solid foundation is the key to expanding your financial literacy and improving your money management. Make 2025 a prosperous year!