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Sunday, June 23, 2024

9 budgeting hacks that help build financial strength and resilience

9 budgeting hacks that help build financial strength and resilience

05.07.2023

Despite recent drops in inflation, it can still feel increasingly difficult to get by as the cost of daily goods seem to continue to be on the rise.1

According to a recent Gallup poll, 50% of Americans feel that they are worse off than a year ago. This is the highest percentage since the Great Recession in 2009.2

Though we as individuals can’t do much to influence the overall economy, we can concentrate on fixing our own personal economies. And that starts with how we’re using our money.

Here are 10 budgeting hacks that will help you build financial strength and resilience during what feels like difficult financial times.

1. Automate bill payments

Missing a bill payment can not only be frustrating, but it can also be expensive. Being late on your bills can force you to make high interest payments and it can decrease your overall credit score.

Take the hassle out of remembering to pay your bills on time and automate them. Check with each of your lenders and service providers to find a convenient and easy way to make your payments online.

2. Create a “wants list” to curb overspending

Spending money can be a lot of fun especially when you buy experiences and things that improve the quality of your life. It’s when we overspend that our quality of life can suffer.

To find that happy medium, let your budget be in charge of what you can buy now and what you can buy later. And when you don’t have enough money to buy that awesome vacation or new smart home device, put it on a “wants list” in a notes app on your phone.

That way, after some time passes, when you do have enough money for that “want”, you’ll remember what it was and where to get it. Or you might realize that you don’t need or want it at all.

Learn more: The 50-30-20 budget rule explained

3. Use cash or a debit card for your problem spending areas

If impulse spending is a problem for you, it’s time to diagnose your specific problem areas.

Perhaps you’re a sucker for new clothes or carryout food and you’re constantly busting your budget in those areas. Instead of racking up the credit card and screaming “YOLO”, try the budgeting hack of only using cash or a debit card for your indulgences going forward.

That way, when you’re out of money in those specific spending categories, you know it’s time to stop.

4. Sock away funds for emergencies

When you have money in the bank, you gain financial confidence knowing that you’re ready for anything that comes at you.

Deciding how much to save for an emergency can be the first question for many. While most financial professionals suggest 3 to 6 months of expenses saved, using an emergency fund calculator can help drill down on a specific number.

This pool of cash can pay for things like broken appliances, vehicle repairs, home emergencies, insurance deductibles and so much more.

5. Get realistic with sinking funds

Emergencies can be difficult to plan for because they are unexpected. Then there are the larger expenses that don’t happen every month that aren’t unexpected.

These are planned moments and experiences that we may forget about until they pop up like vacations, insurance payments and holiday spending. Instead of going into credit card debt to pay for these important expenses, a smart budgeting hack would be to create a sinking fund so you’re ready to pay for them in cash.

For example, let’s say you spend around $1,800 during the winter holiday season on gifts, get-togethers and experiences. If you put away just $150 per month into a separate account or savings bucket (aka Sinking Fund), you’ll have that $1,800 ready during the holidays one year later.

6. Save on homeowners and auto insurance

One of the easiest and quickest ways to save money is with your homeowners and auto insurance. The competition is fierce between all of these insurance companies. That bodes well for consumers because we may find a cheaper price. If you make a change, be sure to consider the risks of lower-cost coverage. You may want to consult with an insurance professional if you're not a do-it-yourselfer. 

I look into switching my home and auto insurance provider every two years. With the amount of new customer discounts, you can save hundreds or even thousands of dollars each year.

Additionally, I try to bundle my homeowners and auto insurance together to maximize my savings. This simple move adds to the easy insurance savings.

And lastly, if you have sufficient emergency and sinking fund savings set aside, you may want to consider increasing your insurance deductibles. When you pay a higher deductible, your insurance provider may lower your monthly premiums altogether. This will free up more of your hard earned monthly cash.

7. Gulp your daily “budget smoothie”

Budgeting might feel like a hassle, but if you manage your money in daily bite-sized portions of time, it’s not so bad.

Kristen Ahlenius, Director of Education at Your Money Line, calls this a “budget smoothie.” She takes 5-10 minutes out of her morning to review her budget and ensure she’s on the right track financially. Just like drinking that green juice might make you physically healthy, your periodic morning “budget smoothie” can help make you financially healthy.

Also, with identity theft, scams and frauds so prevalent online, it’s good to review all of your accounts anyway to ensure your accounts are secure.

8. Budget with your partner

If you’re married or in a committed relationship, budgeting with your partner can make your relationship more harmonious. Discussing personal goals, crafting relationship plans and reviewing areas for financial improvement are all easier when you’re looking at the numbers together.

When we’re in control of our money, we can more readily work toward the life we want. And when we share our lives with someone else, it’s important to be on the same page. Our budgets can quite literally be that “page.”

9. Use a free budgeting app

Perhaps you’ve tried budgeting before and it just didn’t stick. Or maybe creating a budget became too cumbersome.

It could be time to automate your budgeting process. I’d suggest trying out Empower's budget planner. It allows you to create a detailed budget, make adjustments as needed and get a full view of your spending – all online, secure, and convenient.

This way, you’re taking the effort and extra work out of your hands and allowing technology to do the work for you. That’s the ultimate budgeting hack.

1 U.S. Bureau of Labor Statistics, “Consumer Price Index.”

2 Gallup, “Half in U.S. Say They Are Worse Off, Highest Since 2009,” February 2023.

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Andy Hill, AFC®

Contributor

Andy Hill, AFC®, is the award-winning family finance coach behind Marriage, Kids, and Money, a platform dedicated to helping young families build wealth and happiness.

Author is not a client of Empower Advisory Group, LLC, and is compensated as a freelance writer.

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