The start of the new year gives people the motivation to make changes and begin anew. Many want to focus on saving money and spending less. If you share this goal, here are three ideas to cut spending and increase savings:
Eliminate unwanted expenses
The pandemic has given us an opportunity to reevaluate where and how we want to spend money. What is most important? For many people, some of the expenses they took for granted pre-COVID are no longer essential.
What did you spend money on in the past that you don’t miss? Can you reduce or eliminate those expenses permanently? A look through your bank and credit card statements will help you identify where your money went before the pandemic. You will also see automated payments that you no longer need, use or want.
Consider all optional expenses. Some examples are clothing, TV and streaming services, phone services, unnecessary insurance (have your insurance needs changed?), restaurants, entertainment, impulse buying. The choices will be different for everyone.
Maximize credit card points
Many credit cards offer great rewards on your everyday purchases. The key is to find a card that corresponds to your spending patterns.
Look at your credit card statements and determine in what categories you spend the most. Is it supermarkets? Gas stations? Utilities? Streaming services? Travel? Restaurants? Something else?
Once you know how you use your credit card, you can search for cards that give you the greatest rewards in the categories where you spend the most. Depending on the credit card, you can then use the rewards to pay the credit card bill, redeem for cash, or exchange for gift cards.
In its article Best Reward Credit Cards of 2002, Money.com discusses factors to consider when evaluating reward credit cards. You can explore credit card rewards programs at Nerdwallet.com and Forbes Advisor.
Automate
Automating your savings makes it easy to save regularly and to save more. Have a set amount transferred to a savings account each month either directly from your paycheck or from your bank account. While the interest earned on savings accounts is not great at the moment, having the money set aside makes it easier not to spend it. Automatic transfers also save you time and create a regular savings plan. Bankrate.com has a list of savings accounts with the best current interest rates.
Automating your payments saves you time and potentially money by avoiding late payment fees and interest. Regular, on-time payments will also have a positive impact on your credit score.
If the amount of the payment varies each month, set up an online account with your billers and sign up for autopayment. The company will then “pull” the amount due out of your bank account or charge your credit card each month. You can set up your credit cards for automatic payments, too, and specify the amount to be paid.
If the amount of the payment is the same each month, it is easy to set up automatic bill pay through your bank. Depending on the recipient, the bank will “push” the money to the payee by either sending the payment electronically or by mailing a paper check on the day of the month you specify.
Eliminating expenses will save you money. Maximizing credit card points will help reduce the amount you spend from your own pocket. Automating savings and bill paying will save you time, increase your savings, reduce or eliminate late payments fees and penalties, and have a positive impact on your credit score.
This blog is published to provide you with general information only and is not intended to provide specific or comprehensive advice. Money Care, LLC encourages individuals to seek advice from competent professionals when appropriate.
