Photo by Fabian Blank on Unsplash
By freelance writer/contributor Lucy Wyndham
Americans continue to live beyond their means. The average household has about $137,063 in debt. An estimated $16,883 of that is attributed to credit card debts. However, the median income per household in America stands at just above $59,000. With the cost of living rising faster than the incomes, we face increasing choices in how we spend our money. Being financially savvy is becoming much more important. Just as we should design a life plan and individual goals, this has never been truer when it comes to finances. Here are some great effective hacks to get you started.
-
Cash Envelopes
The use of a cash envelope system is a great way to budget your money every month. If your are looking to get a handle on your spending and avoid debt or credit cards, this could be your answer. This is a great saving strategy for those who tend to overspend every month and can help you get your finances in shape.
To get started you would need to draw up a budget for your household. This can be weekly, biweekly or monthly and is completely up to your preference. Your cash is then separated into the various envelopes for spending throughout the period. By sticking to cash, you can only spend actual funds you have and avoid driving up those credit card bills. At the end of the period, the envelopes are refunded and the cycle started all over again. This is also a great time to evaluate how well the allocated amount worked for you. Were you left over with funds in the food budget envelope? You can reduce the amount and put the difference elsewhere, including a savings account. Before you know it, you can be in complete control of your finances.
-
Small Amount Transfer
Making monthly saving a habit can be one of the best financial decisions you make. A common misconception is that in order to save, you need to make drastic cutbacks and go without many things you have become accustomed to. By making the smallest adjustments you can easily make progress towards your saving goals.
Set up a savings account and every month, you can set up an automatic transfer into a set amount into it. If you chose to transfer $30 per month into a savings account; the equivalent of one dine out meal per month. By the end of the year that is $360 in savings without you even noticing it.
-
Make Use of Your Kitchen
This may seem very simple but your wallet will certainly thank you for this one. Learning to make a few go to meals at home can have many great benefits. Above all, cooking at home is a lot cheaper than takeout or dining out. Restaurant and takeout meals can carry a markup of up to 636 percent. With those prices, it is very easy to spend much more than you actually need.
Cooking at home a few times a week is also a great way to eat healthy delicious filling meals and by batch cooking and storing in your freezer, you have a ready meals for those long days after work. With a smaller dining out bill each month, you can have extra cash to go elsewhere such as into a savings account (see above) or towards paying off those debts.
These simple but effective hacks are just a few of the many ways you can whip your finances into shape in a matter of weeks. Above all, by learning the art of prioritizing and contentment, you can cut many unnecessary financial habits and achieve financial happiness.