Financial Diet Tips To Stretch Your Wallet in 2022
Now that 2023 is officially in full swing, you’re ready to start a diet that’s a little nontraditional — one focused on your finances. Specifically, you want to find ways to trim your expenses, so you can achieve better financial health and stability in the new year.
Of course, this doesn’t have to mean you can’t still indulge, you just need to be more selective with your spending. Here’s a look at five financial diet tips from money management experts to help get your budget in shape.
Limit Your Bar Tab
Pretty much everyone has been there, what was supposed to be a couple drinks with friends turned into a bar tab so hefty, you think you’re seeing things. One of these nights probably won’t ruin your finances, but making it a habit can really pack on the debt.
“The place I usually find excess fat in a client’s financial diet is actually a great overlap with physical wellness — bars & drinking,” said Nathaniel Hoskin, CFP®, founder and chief investment officer of investment management company Hoskin Capital. “Whether a client is 25 or 65, it’s incredibly common for them to overspend on alcoholic drinks and evenings out.”
Thankfully, Hoskin said finding a balance is a very easy fix. Specifically, he said splitting a bottle of something — i.e., wine — with friends before hitting the town can save upwards of $50 per night. He noted that this can quickly add up to hundreds of dollars per month, which equates to thousands in savings per year.
Cut Useless Subscriptions
In a traditional diet, avoiding mindless eating is always advised, as it doesn’t make sense to waste calories on food you don’t even enjoy. This applies to a financial diet as well, because there’s no point in paying for subscriptions you don’t use.
“Once you’ve added up all those streaming services, newspapers [and/or] news sources and even fitness and dieting apps, these small charges can add up to more than $1,000 a year,” Hoskin said.
He said most credit card companies offer tools to help you keep track of your subscriptions in their app.
“Walking through all of them and deciding which ones are truly necessary will add dollars back to your pocket and stretch your wallet a little bit further,” he said.
Monitor Impulse Purchases
Just as a few mindless calories here and there can keep you from reaching your weight loss target, making impulse purchases a habit can impede your financial goals.
“These are usually less than $20 and can be anything from potato chips to a new mug,” Hoskin said. “When I walk through a monthly statement with a client, they can often find upwards of $200 of purchases that they wanted, but didn’t really need.”
Adding up your impulse purchases each month can serve as a much-needed eye-opener, he said.
“This practice helps you become more aware of your spending habits, which is a surefire way to save money going forward,” he said. “It’s also a good way to flex your self-discipline muscles, which makes it easier to make the same smart decision down the road — regardless of the temptation.”
Pay Off Credit Card Debt
It’s hard to move forward with your financial goals when you’re weighed down by hefty credit card balances.
“Cut the credit card fat in your wallet, to one, to help reduce debt over time,” said Adam Deady, CFP, a consultant with MassMutual. “To get started, prioritize the order you pay off your different credit card balances.
Like dieting, he said taking this approach to paying off credit card debt will help you stay motivated because you can monitor your progress.
“You can do this by making the minimum payment on each card and then attacking the card with the lowest balance first by paying as much as you can afford,” he said. “Then repeat that step for the next card balance. Or you and make the minimum payment on each card and then attack the card with the highest interest rate.”
This will take a serious commitment on your part, but imagine how much lighter you’ll feel when the debt is finally gone.
Negotiate New Rates With Service Providers
You have to eat to live, so dieting is about building healthier habits, like learning to stop overeating. Similarly, you likely have at least a few services you need, but that doesn’t mean you have to pay a premium for them.
Ahren Tiller, founder and supervising attorney at The Bankruptcy Law Center, a law firm with several offices in Southern California, said service providers are often willing to negotiate a lower rate if they know you’re thinking about switching to a competitor.
“In fact, most large companies have a specific department for the retention of current customers,” he said. “They know the cost of acquiring a new customer is more expensive than retaining a customer, which is why they will often discount your rate in order to keep you happy.”
You won’t know if it works until you’ve tried it, so giving customer service a call could help reduce your monthly bills.
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