4 Tips To Find Extra Money in Your Budget, According to Jade Warshaw
Written by
Andrea Norris
Edited by
Jenna Klaverweiden
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If you have a budget but neglect doing four key things, you’re “leaving a lot of potential money on the table,” at least according to a video from financial coach and “The Ramsey Show” co-host Jade Warshaw.
Some of her suggestions involve reducing your expenses. Others require extra work. But all four tips can help you find extra money in your budget.
Bring In Extra Income
Warshaw said bringing in extra income is a must and recommended starting a side hustle. For those of you who are wondering whether a side hustle is worth your time, a LendingTree survey revealed that the average extra monthly income from a side hustle is $1,505 for Gen Zers. For millennials, it’s $1,119.
To find a side hustle you’ll stick with, explore options that fit your skills and availability. Here are some of the most common side hustles.
- Selling items online
- Pet sitting, babysitting and caregiving
- Creating content
If you’re unsure about a side hustle, consider working a few more hours at your current job or finding additional part-time work. Or keep an eye out for temporary job opportunities, especially during the holidays or other busy times when businesses need extra help.
Cut Down Your Budget
“If you have not gone through your budget with a fine-tooth comb to see what areas [you can] cut, then you are missing out,” Warshaw said.
Take a close look at your spending and identify areas to cut. Here are a few places where many people can easily find savings.
- Subscriptions and memberships: Assess your use of warehouse club memberships, gym memberships and streaming services. The average U.S. household has four streaming services, spending $61 a month, per a Deloitte survey. Cancel any subscriptions that you don’t use regularly.
- Groceries: Studies show that one of the most common impulse spending categories is groceries. Also, according to the USDA, the average American family spends about $1,500 annually on food that never gets eaten. Just avoiding impulse buys and food waste may considerably improve your budget.
- Electricity: Determine the optimal thermostat settings to reduce your cooling and heating costs and find ways to reduce your hot-water usage, another energy hog.
Prioritize Debt Repayment and Saving Over Investing
If you have high-interest debt or less than three to six months’ worth of expenses saved in your emergency fund, Warshaw said you should focus on saving: “Now is not the time to invest. Now is the time to pull back on those contributions.”
Some financial experts recommend the rule of 6% when it comes to paying off debt versus investing. If the interest on your debt is greater than 6% and you have more than 10 years until retirement, stop investing and instead use that money to pay off the debt. As a Ramsey Solutions personal finance coach, Warshaw recommends that you pay off all debt other than your mortgage before investing, which is part of Dave Ramsey’s “7 Baby Steps” for gaining control of your finances.
Ramsey’s steps also include fully funding your emergency savings — three to six months’ worth of expenses — before investing.
Change Your Tax Withholding
“So many of us withhold too much out of our checks and then we get a tax return,” Warshaw said. If you received a substantial tax refund last year, divide that amount by 12 to see how much higher your monthly take-home pay would have been if you didn’t get a refund. According to Warshaw, this is money you should be using for other financial goals.
To change your tax withholding, use the tax withholding estimator on the IRS website. Then submit an updated Form W-4 to your employer.
Warshaw said that by adjusting your tax withholding and following these other tips, you can “make the most of the money that you’re budgeting with.”
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