Follow these 13 actionable tips to stretch your money!
Whether you own or rent, there’s no doubt your budget has been feeling the effects of recent inflation. And while you’re powerless to improve the current economic changes, that doesn’t mean you can’t take action to combat higher prices. High inflation decreases your purchasing power, forcing you to spend more and get less in return. As a result, higher prices make it difficult to save money and reach your financial goals. Perhaps you’re not ready to take drastic measures like moving to a smaller apartment or taking public transportation. Instead, start with minor changes that will stretch your money so you get more bang for your buck.
1. Set financial goals
Goal setting is an important — yet often overlooked — step when trying to make progress with your finances. Don’t worry if it feels premature based on your current affairs. Setting goals and executing a plan to achieve them is powerful.
Keeping a specific goal in mind makes you more intentional with your working, saving and spending. In addition, focusing on your financial goals will give you the necessary clarity to make sound money decisions and the motivation to push forward.
2. Live on a budget
Getting good at making your money go further requires a certain level of financial awareness. Once your paycheck hits your bank account, do you have a plan for how you’ll spend your money, or do you go with the flow?
Having a plan is crucial, and a budget is a spending plan. The act of creating a budget is simply making a plan for how you’ll spend your money. Learning to live on a budget means you consistently create a spending plan and take steps to stick to that plan throughout the budget period.
Budgeting is a marathon
The first step to successful budgeting is to expect a learning curve. Becoming a budgeting master is a valuable skill that takes time to develop. So, commit to pushing through the tough months even when it feels like you’re doing it all wrong.
Budget your way
A quick Google search on “how to budget” will display many budgeting types and options — don’t get overwhelmed. As your budgeting prowess grows, you’ll begin to learn what methods do and do not work for you.
Approach budgeting as one-size-fits-some rather than one-size-fits-all. There are many different ways to budget. And, when used consistently, each of them will move you closer to reaching your goals. You may realize you prefer to manage your money with digital tools or use a budget binder to organize a more traditional paper budget.
Humans have a pesky habit of overcomplicating things, but budgeting doesn’t require anything elaborate or complicated. If you’ve tried percentage-based budgeting and it was an epic fail, there are simpler options to help you stretch your money further.
We’ve discovered that many folks gain more control over their finances when they manage their money using a zero-based (or zero-sum) budget.
In its simplest form, a zero-based budget looks like INCOME – EXPENSES = 0.
Assign every dollar of your income to carry out a specific financial “job.” Each dollar must serve a purpose, and it’s up to you to decide whether that purpose — spend, save, invest or give. Once you’ve given each of your dollars their assignments and your total income minus your total expenses equals zero, you have implemented a proper zero-based budget.
3. Track your spending
If you often wonder where your money went, it’s time to track your spending. While you may have a general idea of where your money goes each month, how clear are you on the specifics? For example, do you know how much money you actually spent on groceries, fuel and dining out last month?
Get clear on exactly how much you’re spending in each budget category. Having a better grasp on your spending is especially important when deciding how much rent or car payment you can afford each month.
Grab your phone or a notebook and add an entry each time you spend money. Exclude fixed expenses as you’ll be tracking those in your actual budget. Instead, focus on logging your Target trips, grocery runs and coffee pitstops.
Track your spending for a solid month, if possible. If you can’t swing a month, aim for at least two full weeks. At the end of your tracking period, enter your spending data on a spreadsheet or grab a few highlighters to color-code your spending.
Total each category to see exactly how much you’ve spent and compare it to your budget. The information you’ll gather from this exercise is invaluable and helpful when you want to stretch your money in a more balanced way. Your total spend numbers will point to where most of your spending is.
Your spending should reflect your values and priorities. If you discover this is not the case for you, what adjustments you need to make will be clear.
4. Avoid overspending
Overspending can creep up on you. What may feel like $10 swipes of your card a few times a week can quickly amount to high credit card balances or going over budget.
Consider these simple changes to reduce overall spending:
- Order groceries online to avoid impulse purchases
- Reduce online shopping frequency (e.g., order from Amazon only once per month)
- Keep a running “wishlist” of items you want or need. When you come across a great deal, check your list — if the thing is on your list, buy it. If it’s not, move on.
- Unsubscribe from retail emails that tempt you to spend
- Add a personal spending category to your budget. Allocating a specific amount of money to spend in any way you see fit, guilt-free.
It’s not about money
Overspending is often misleading. The reality is overspending is rarely about the actual spending and is almost always caused by an emotional trigger. Therefore, the key to curbing overspending is identifying your trigger(s) and avoiding it (them).
Think back to the last time you felt shame or guilt for overspending. Then, go deeper to understand the underlying emotion that drove your spending? Were you tired? Did you have a bad day at work? Did you fight with your partner?
Retail therapy may feel helpful because we get a boost of adrenaline when we spend. However, you only perpetuate the problem when you avoid dealing with the emotions driving your spending habits. Instead, pay attention to exactly how you’re feeling the next time you experience the urge to spend money.
Once you’ve identified your spending triggers, create a plan to avoid them and break your pattern of overspending.
5. Negotiate your bills
A great way to stretch your dollar is to negotiate your bills each year. You’ll be shocked by how many of your service providers are willing to lower your rates with a simple request.
Review your monthly expenses and make a list of providers to contact. You can call the company or use their live chat feature if they have one. Explain to the representative that you want to reduce your monthly payment and inquire about their best deal. Expect a few “nos” and many a “yes,” especially if you’re kind and polite when requesting a discount.
This strategy is perfect for saving money on your:
- Utility bills
- Cell phone bill
- Cable bill
- Car insurance bill
- Credit card and bank fees
- Other insurance premiums
Regarding medical expenses, your best bet is to contact the billing department and offer to pay them a percentage of the total balance. Often, the provider is willing to accept a fraction of the amount owed to settle the account.
6. Pay off debt
Debt payments, especially those with high-interest rates, can eat up your income quickly. Creating a debt payoff plan will give you a road map to paying off your debt and keeping the money you previously sent to your debtors each month.
In addition, if you have a good payment history, contact your credit card servicers and request a lower interest rate. Refinancing is also an excellent option for securing a lower mortgage payment or reducing your minimum payment on personal loans or federal student loans.
Avoid future debt
As you work to get out of debt, it’s good practice to avoid taking on future debts. Trading old debt for new debt is counterproductive and will keep you stuck in a perpetual debt cycle.
7. Plan ahead
Planning into the next quarter, or even an entire year, can help you maximize your savings. In addition, saving a full three to six months of living expenses as an emergency fund will prepare you for any emergencies you experience.
Maintaining an emergency fund will protect your finances against increased expenses in the future, possible sickness, accidents or loss of income.
Forecast your upcoming expenses for the next 6-12 months and determine which you can begin saving for now. Items, such as Christmas gifts, birthdays, tuition, vacations, annual bills, etc., are all expenses you can save for, using sinking funds.
Save a small amount each month (or paycheck) until you save enough money to cover the expenses in full. Keep your sinking funds in a separate savings account to avoid accidental spending.
8. Try a savings challenge to stretch your money
Challenges and competitions are very motivating. And when otherwise unpleasant activities feel like a game, even adults can find enjoyment. Get started with a simple challenge, such as saving each five-dollar bill you receive or tossing your loose change into a jar for a predetermined time.
Are you competitive by nature? Ask some close friends or family members to join you. You’ll all benefit from holding each other accountable and boosting the competition factor.
9. Plan your meals
More than any other suggestion on this list, meal planning has the potential to stretch your money further. You’ve likely noticed your grocery bill increasing month after month. Plan out your meals and use that plan to create a shopping list.
Making a mental note of meals you’re hungry for while grocery shopping does not constitute meal planning. More often than not, heading to the grocery store without an intentional plan will cause you to go over budget.
Food waste accounts for 30-40 percent of the food supply in the United States (as of 2021). Shopping for groceries without planning often leads to a fridge full of unused fresh fruit and produce at the end of the week. If your food budget is $1,000 per month, that means $300-$400 of that budget will probably be wasted, if you’re not planning.
10. Stretch your money by ditching your cable
One of the easiest ways to maximize your money is to cancel your cable service. Today, 56 percent of U.S. homes no longer rely on cable or satellite boxes for content.
We’re fortunate to have the unique opportunity to stop paying for dozens of channels we don’t watch and customize our viewing experience. In addition, the number of available streaming services has exploded in recent years, with live sports and bundles finally being an option without cable packages.
Have an attachment to traditional cable and refuse to go without it? Keep your subscription but use tip No. 5 to negotiate a better deal.
11. Get a programmable thermostat
Unfortunately, energy costs are on the rise, too. Depending on your location, you’ll experience increased costs throughout the summer months (even if you’re trying to stretch your money). However, an Energy Star Certified programmable thermostat can cut your utility costs by up to 8 percent per year (around $50/year).
Not only will a programmable thermostat save you money but buying a “smart” model that works with Amazon’s Alexa or Google’s Home systems will also offer the convenience of allowing you to control the temperature with your voice.
Double your savings
Some programmable thermostats can cost upwards of $200, but more affordable options are available. In addition, many natural gas and electricity providers offer rebates for switching to a programmable thermostat.
In some instances, the rebate amount may even exceed the thermostat price. Contact your providers before purchasing your thermostat to determine which models qualify for rebates in your area.
12. Use an app
Looking for more convenient ways to stretch your money? There’s an app for that! Using mobile apps to save money or earn cashback on purchases are easy ways to combat higher prices.
Apps are available to save money on groceries, household items and even fuel. Other apps offer cashback when shopping online and in-store with your favorite retailers. There are even apps that will reward you for exercising.
Keep in mind that using cashback apps won’t make you rich. But using them consistently will help you save money on your everyday purchases, plus earn cashback rewards you can redeem for gift cards or cash.
13. Get a side hustle
There’s no doubt that cutting costs and saving money is a solid strategy to help stretch your money. But, focusing on increasing your income at the same time will boost your finances into overdrive. Plus, finding new, creative ways to earn small amounts of money in your free time will diversify your income and put you on the fast track to reaching your financial goals.
Monetize your passion
Here’s the good news: we live in an era where you can make money in countless unique, exciting ways. You no longer have to work overtime at a job you hate to make your rent payments each month.
People are turning their passions into full-time incomes from side hustles, such as pet-sitting, baking and even posting on social media. Brainstorm a list of your favorite hobbies and different ideas to monetize them.
The bottom line
Rest assured, if you’re feeling increased financial pressure, you’re not alone. Understand that maintaining financial stability in these uncertain economic times is still possible. Lowering your expenses and making a margin in your budget will allow you to spend your money on the things that matter most.