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- I asked a financial planner to look at my money and help me save more next year.
- He suggested spending less on eating out and online shopping.
- He also recommended considering inflow versus outflow and taking advantage of a cash-back credit card.
At the end of every year, I audit my spending and look for opportunities to change my money habits so I can save more in the new year. When I started to eyeball my credit card statement from 2023, I realized that my bills reached an all-time high this year. This meant that I didn’t hit my savings goal of holding onto 20% of my income and my overall net worth wasn’t able to grow very much.
In order to make 2024 different from this year, I met with financial planner Bryan Kuderna and asked him to look at my finances and suggest ways I can realistically save more than 24% of income in the new year. Here are his four actionable tips.
1. Get comfortable eating meals at home
In any given month, more than 75% of my charges were food and beverage related. A big reason why I barely used my kitchen this year was because I became a first-time mom and didn’t have the time or energy to meal prep. However, my dining out habit came with a hefty price tag.
“If you plan ahead and buy ingredients at the grocery store, you could cut your food bill every month in half,” Kuderna said. “Not only has inflation made the cost of eating out quite high but the option of tipping at places has gotten out of control. Even places where you buy pre-made food are showing you a tip screen when you check out.”
When I looked at receipts from recent food purchases, I noticed that he was right. Since I was getting in the habit of eating out or getting takeout four to five times a week, my monthly spending was higher than usual in the food category.
2. Put some guardrails up for online shopping
I knew that I was getting a bit too relaxed with my online shopping habits but I had no idea how much I had spent this year on Amazon until I added up all of my charges from the 156 orders I placed over the past 12 months. I assumed that I had spent 50% of what I actually did.
“Online shopping can sometimes be compared to gambling,” Kuderna said. “You can become addicted and not even realize what you’re buying. You have to put guardrails in place so that you don’t fall prey to the one-off purchases that start to really add up.”
I realized I often think about something I need and hit the buy now button without thinking much about it. Kuderna suggested that I set limits to how much I spend on Amazon — I’ll aim for 50% less a month than I did in 2023 — and hold myself accountable to that goal by having one day a week where I do all of my Amazon shopping to avoid impulse purchases.
3. Consider a cash-back credit card
Aside from rent and a few other recurring bills, like insurance and utilities, most of my spending is done on my personal credit card. When Kuderna noticed that I’m using a travel rewards credit card, he suggested I consider a cash back one instead. Years ago, I traveled a lot and having those rewards came in handy to score a free flight or hotel stay. But now, I rarely pack up and go anywhere. My rewards aren’t being used or maximized.
“With a cash back credit card, you will get money back every month that you can use to pay your bill or put into your savings account,” Kuderna said. “Plus, some bank-issued cash back credit cards give you a bonus if the cash reward is deposited into a checking account from that institution.”
Putting all of my expenses on a cash back credit card that offers a range of 1.5% and 5% cash back on every purchase, depending on the category, seems like a worthwhile and easy way to save extra money every month.
The best cash back credit cards help optimize your earnings on everyday purchases and put cash back in your wallet. Popular cards include the Chase Freedom Unlimited and the Discover it Cash Back Card.
4. Increase income or decrease cost of living
Putting my credit card spending aside, my cost of living is the highest it’s ever been, from rent in New York City to health insurance premiums for my family.
“It’s a matter of inflow and outflow,” Kuderna said. “If you can’t change your outflows (rent, insurance, utilities) but want to save more of your inflow (your income), then you might have to find ways to bring in more money. If you don’t want to do that, you have to find ways to reduce your outflows.”
He recommended looking closely at your spending to see if there are any outflows to reduce, from coffee order every morning to a handful of subscriptions you hardly use. But if you find that you can’t lower any of your expenses, it could be time for a bigger change, like a career change or a move to downsize your cost of living.
Since it was less realistic for me to change my lifestyle, I decided that I needed to be practical about my inflow and find a way to earn at least 10% more than I did this year. That way, I’d be able to continue covering my outflows and have extra money to use toward building my overall net worth. As a business owner and freelancer, my income varies month to month. But I’m putting together new packages to pitch clients and looking into ways to use my skills to pick up a new side hustle or two in 2024.