I think it’s that time when we are all coming down from the craziness of the holidays and starting to kick ourselves a little bit for the slowdown on the list of resolutions we professed we were going to focus on this year. Let’s face it – we are all human. I have not exercised more regularly, read more consistently, or made a point to spend more time with my friends and family because, duh – life is busy and just gets in the way. The one thing I have done though is pay better attention to my spending and that is an exercise that has long-lasting benefits for all of us.
Now, I have a confession. I hate shopping. Literally! It doesn’t matter if I need groceries, office supplies, clothes for my kids who never seem to stop growing, or some piece of sports equipment that cannot be lived without – I just loathe the concept of having to go to a store. Now don’t get me wrong – I am a small business owner and there are things I must buy, and I support my cohorts in my community whenever I can. But you will definitely see me in a grocery pick up spot at almost any store because I just do. not. like. to. shop. Period.
To add to that, I feel like after Christmas there really is not a single thing that my family “needs” since the living room in my house looked like a well-stocked version of Target. If my kids express their “wants” I lovingly remind them about the things I shared in my last post about teaching them about money and how they can earn it. Needless to say, they don’t love me as much this time of year! This is where we do Frugal February.
Now, before you tell me I’ve lost my mind and that everyone does this around this time of year, I would question how many people do it attentively. We all make small sacrifices conscientiously to eat out less and skip the Dunkin Donuts line, but do we really pay attention to the big stuff. This is the time of year when everyone must look at their taxes. And because we all have to do taxes each year, I often tell clients I work with to also look at their spending during tax time to give their budget a face lift (because who doesn’t love a good-looking face?). Here are the ways you can start:
- Track your expenses. Now this sounds simple, and it is, but I mean really track everything. Find a folder or a basket and throw every receipt you have in it whether its for gas or groceries or a Snickers bar you had to have because that New Year’s diet is driving you crazy. At the end of the month make a list and categorize where your money went, and you may find some surprises you were not expecting. This is no different than counting the calories you eat so you can think twice about what you are consuming. When you see where you hard earned money is going you may think twice before you pull out your wallet.
- Prioritize Free and Low-Cost Activities. I used to say all the time that nothing in this world is free, but in reality that’s just not true. Now, you may feel like this is a stretch, but if you look hard enough you will, in fact, find free things to do! In the area where I live there is so much history and endless opportunities to take that in. I’ve often seen free trials for workout classes or yoga, and plenty of events such as seminars at public libraries. Also, if you are an outdoor lover there is nothing more lovely than taking a hike among the many picturesque spots, especially in Upstate New York. You may feel like you have to be creative, but the opportunities are out there!
- Audit your checkbook. This is as important as tracking your everyday expenses. So many of my friends have gotten rid of cable and it makes me so jealous! Unfortunately for me, my husband loves to watch dirt bike racing live and God forbid there is a glitch in the streaming system. It’s true what they say – marriage is about compromise. So, while I continue to pay the cable bill, I have looked at my other fixed expenses to see where I can find savings. Have you called your insurance agent and asked them to review your auto and home policies? Are you taking advantage of discounts on those policies such as credit for driver’s education or a security system you had installed? Have you looked at your bank and credit card statements to see if you are being charged for fees that can be avoided. The most popular one is paying ATM fees that are so not necessary! If you use a local bank, use their ATM locations. Every time you don’t it could cost you $5 or more and that adds up very quickly.
- Pay yourself for your hard work. As you get excited when you find savings from doing these things, pay yourself! Motivation is the best reward so if you saved $100 by cutting cable, put a portion of that away for a rainy day or toward something big, like a vacation. Don’t deprive yourself of some guilty pleasures because if you do you will not be incentive to do the things to get further ahead. If you are not interested in travelling but love the notion of not working forever, put some extra savings into an IRA. Depending on how you set it up you’ll not only be adding to your net worth but saving on taxes too – double score! There is no right or wrong answer or style here so do what suits you best.
Whether you take this challenge on as an individual, a couple, or as a family try to have some fun doing it. Make a game out of it with your children. Find apps that are fun to interact with or help lessen the burden of tracking everything. Sign up for reward apps that do pay you for the things you actually need to purchase. Look where you are offered extra cash back incentives through your credit card providers. If you find fabulous success doing a Frugal February keep it going! A theory exists that it takes 21 days to create a new habit, but if you are like me sometimes I the benefit of a little extra time. You can do anything you set your mind to, especially when you set milestones and reward yourself for meeting them along the way.
Iris Buczkowski is the founder of Birch Wealth Management (birchwealth.com). Birch Wealth Management is a Registered Investment Advisor (RIA) with the Securities and Exchange Commission (SEC). Original content provided by Iris is for educational purposes only and should not be construed as investment advice.