10 Tips to Help You Optimize Your Spending

Managing your personal finances can be difficult. While you set out with the best of intentions, before long, any budgets you build or spending limits you set for yourself have fallen by the wayside, and you’re spending a lot more than you ever intended to. This is an extremely common problem; a survey of Americans revealed that 65% of them didn’t know how much they’d spent last month. If that’s you, then you might be able to benefit from some help streamlining your finances. Here are 10 tips to help you optimize your spending!

1. Prioritise loans and debts

It should go without saying, but the first thing you need to do when you’re optimizing your spending is to prioritize any loans or debts you might have outstanding. If you’ve taken out any direct lender loans that are weighing on your bank balance, then it’s important to pay them off as quickly as you can; this will make both the loan company and you happier in the long run. When you’re building a budget (more on which in a moment), make sure you keep loans at the forefront of your mind.

2. Build a budget

Almost before you do anything else, it’s important to build yourself a realistic budget when you’re looking to manage your finances. Your budget should be comprehensive and rooted in fact; you shouldn’t be incorporating anything you don’t absolutely know to be true, and that goes for both income and expenditure. Sit down and create a budget for yourself that takes into account all of your finances, both incoming and outgoing, and you’ll be much better off.

3. Set yourself spending limits

What constitutes a “good” spending limit will, of course, depend largely on your personal circumstances, but setting spending limits is a good idea in any case. This will help you to know when you’re about to overstep the line in terms of your personal spending, which can be an issue when you’re not keeping close track of what you’re paying. After all, little purchases here and there can really add up, but if you know you have hard limits, it’ll be easier to observe them.

4. Have long-term goals in mind

Alongside your budget, it’s a good idea to create long-term financial goals for yourself. These might include buying a house, going on holiday, or even just buying something for yourself that you’ve wanted for a long time. Whatever they may be, setting long-term financial goals will give you something to work towards and will help you to curb spending; after all, if you spend on frivolous or inconsequential things, you’ll have less left over for your long-term goals.

5. Download financial management apps

Whether you favor iOS or Android, there are a whole host of financial management apps out there that will help you to keep a closer eye on your money. Apps like Emma and Money Dashboard will show you important financial information like your income and expenditure, and they’ll also make recommendations based on your spending patterns. You can also download apps like Snoop for personalized spending suggestions.

6. Obey the 50-30-20 rule

The 50-30-20 rule is a classic spending stipulation that goes thus: you should spend 50% of your budget on things you need, 30% on things you want, and 20% on savings. It’s not a hard and fast rule; if you have a fluctuating income, for instance, then you may find that one month, you’ll need to spend more on things you need rather than things you want. However, for the most part, the 50-30-20 rule is a good way to live in terms of optimizing your spending.

7. Control spending on nights out

It may be easier said than done, but one great way to optimize your spending is to make sure that you don’t spend more than you need to on a night out. It can be easy to get swept up at the moment and buy more drinks than you need, for instance, or purchase food when you weren’t planning to, but by setting a hard limit on the amount you’re spending when you’re out, you’ll make sure that you don’t overspend, even if you get carried away.

8. Practise mindful spending

Mindful spending revolves around the idea that you should be paying close attention to every single spending decision you make. Before you buy something, try to get into the habit of focusing hard on what you’re buying and why you’re buying it. Think carefully about how what you’re buying fits into your overall life goals, why you need it, and what it will do to improve your life. This will, of course, require a certain level of self-discipline, but the benefits will be immense.

9. Automate where possible

Automation in spending is a great way to control your finances. If you automate things like paying into savings accounts or paying standing orders, then you’ll never forget to make important payments, and you’ll also know that your savings are covered, so whatever’s available to you is what you have left over. Make sure to set up standing orders to cover regular payments whenever you can, and where you can’t, set up calendar reminders instead.

10. Cancel subscriptions

Subscriptions, especially lapsed subscriptions you’re no longer using, can be huge money drains. It’s important to check your bank account every month or so to make sure you haven’t let any free trials tick over or that you don’t have subscriptions left that you meant to cancel a long time ago. Whether it’s Amazon Prime, Netflix, or Spotify, any subscriptions you’re no longer using should be canceled as soon as you realize they’re not useful for you anymore.