Finding ‘New Money’ in Your Expenditure Plan (Financial Advisor in Jersey Shares 7 Tips)

The end of the month is a stressful time for many people. Believe it or not, even high net worth people frequently feel that there’s not enough to put toward their savings objectives, obligations, and hobbies.

The answer is to reevaluate your spending plan! Really!

“I got the money now, but will it continue forever?” is a common refrain from celebrities like Rob Gronkowski, Kristen Bell, and Carrie Underwood. “You just never know,” the saying goes.

The seven methods I teach customers in New Jersey to locate “new money” in their budgets are something I preach to them as a financial counselor here in the Garden State. In order to guarantee that every dollar you spend is working towards your goals, these strategies are meant to assist locate some wiggle space in your budget. Our epidemic of Coronavirus is a great opportunity to improve our financial habits, and we should utilize it to our advantage.

Tip #1: Make a Budget Checkup

The first piece of advice is simple, yet it’s often missed. A lot of people don’t want to concede defeat or feel constrained. If you don’t keep track of your finances, you won’t know how much money you have available to work with each month.

Congratulations if you already have a budget in place! You’re making progress. Make sure to evaluate it at least once a month to determine if there are any areas where you’re overpaying.

For example, many people put aside $400 a month for food because they believe that’s the amount they should spend. For the previous three months, you’ve spent an average of $475 per month.

You have two choices in this situation:

  1. Rather than living in denial about your family’s actual grocery budget of $475 per month, you can take control of your finances by committing to that amount going forward.
  2. Trying to save money is an option.

Using this strategy, go over each row of your budget and make sure it accurately represents your actual costs.

Is Your Wallet Full with Cash?

Now is the perfect moment to create a spending plan. Budgeting becomes more difficult the more money you have, particularly if that money isn’t guaranteed for the rest of your life, such as in the case of professional sportsmen and company owners. Are you saving enough for your investments, for an emergency fund, or for your future?

There are a plethora of applications out there that may help you keep track of your income and spending without requiring any effort from you. In certain cases, you may import and classify your financial transactions right from the app. You may also keep track of your assets, liabilities, and net worth using tools like these, giving you a bird’s eye perspective of your financial situation. Having the assistance of a financial counselor, on the other hand, may help you get a better understanding of your financial situation and develop a strategy that works best for you.

Ultra-wealthy people, it has been reported, drastically underestimate their expenditure by as much as 50% on average. If you need assistance, don’t hesitate to ask for it.

Getting Rid of Unnecessary or Disappointing Expenses

The easiest method to discover “new money” in your budget is to eliminate any unnecessary expenditures that you don’t use or like.

While working as a financial adviser in Jersey, I often discover that customers are continuing to pay for their old gym subscriptions even if they haven’t been there in years. Alternatively, they’re shelling out for a Disney+ subscription they’ve only used once in the last year.

Small expenditures, even if they don’t seem like much, may quickly eat away at your savings.

A simple method to free up money without having to give anything up is to cut out unnecessary spending, such as a $5 cup of coffee that doesn’t really make you happy. A win-win situation.

Tip #3: Cut Your Monthly Bills.

Take a look at your bills once you’ve reduced your “extra” spending. (Insurance, cable, Internet, phone, food, etc.) bills What can you do to save money?

Here are four simple ways to reduce your food costs:

  • Be prepared for your trip to the supermarket by making a shopping list beforehand (and stick to it)
  • Once a week is the maximum number of times you should go shopping.
  • Only purchase in bulk if you are in desperate need of the item (if not, you could be overspending on what eventually becomes waste)
  • Make sure to stock up on a few “easy” options in case you don’t feel like adhering to your meal plan at the time (a fallback item is often cheaper than dining out)

Shopping for cheaper insurance rates and consulting with your financial adviser are two ways to save money on other expenses. Foran Financial Group just published a blog article on POAs, Health Directives, and Insurance. (Neither Foran Financial Group nor LPL Financial provides legal services or advice of any kind. Please seek the advice of an attorney in your particular circumstances.)

How to Keep ‘Fun Money’ and ‘Bill Money” Separate

As long as you have enough money in your bank account to pay the purchase, you may imagine you have enough money to go out and buy anything. In my own case, I’ve been guilty of this. However, it’s quite possible that you’ve already set aside some of that money for bills and other necessities.

To make sure you have enough money to cover your monthly obligations, keep “fun money” separate from “bill money.”

You can do this in a few simple ways.

  1. Do your best to allocate enough money to meet your monthly expenses using a budgeting program, and underline any funds that have already been allocated.
  2. Keep two distinct checking accounts: one for bills, the other for discretionary expenditures.

Tip #5: Make Saving a Top Priority

Treat each financial objective like a monthly fee and save accordingly.

Create a separate line item in your spending plan for Roth IRA contributions, such as $500 each month. Treat your Roth IRA as a non-negotiable item when filling out your monthly budget. Prioritize that area, then spend the remainder of your money for required and optional needs.

Increasing Your Income Is Tip No. 6

Increasing your revenue is another approach to locating “additional money” in your budget. Although it isn’t a must, you might look for new work.

  • Used goods may be resold.
  • Ask your boss for a pay boost.
  • Crafts, cooking, or sewing may be turned into a side-hustle.
  • Offer your extra room for rent
  • Take care of your neighbors’ pets or home while they’re away.

One other option is to pay off your debts!

What if you want to spend more money? Pay off any high-interest credit card debt, a vehicle or school loan, and even your house if you have the money. Your future earning potential is reduced when you pay interest since you have less money available to spend in the near term, but you also have a less amount of money to invest in the long run.

‘Bonus’ money should be saved throughout the year.

Finally, saving any “extra” dollars you get during the year will help you expand your financial plan. Included in this are:

  • Refunds from taxes
  • reimbursement of property taxes
  • Checks for stimuli
  • money for birthdays or holidays
  • A one-time bonus or overtime money from a job.

This “extra” money might easily be spent on unnecessary items if you don’t have a strategy for how you’re going to spend it beforehand. To avoid falling into this pitfall, make a promise to yourself that you will put aside a portion of your income for paying off debt, saving, and achieving other financial objectives. Consult with your financial adviser about the best ways to invest, pay off debt, or build an emergency fund with this money.

Getting Started Is the First Step

The following are just a few of the ways in which I assist my customers to locate fresh money in their budgets. Even more, approaches may be discussed with Foran Financial Group, or if you need assistance implementing any of these recommendations, we’re available.

A Jersey financial adviser is committed to helping customers achieve their financial objectives and experience less worry as they approach retirement.

Make the first move by contacting us for a free, no-obligation consultation. It’s amazing how far a few minutes of talk can take you.

LPL Financial, a FINRA/SIPC-registered investment adviser, provides securities and advisory services.

In no way are the views expressed here meant to serve as particular counsel or recommendations for any one person.

Only residents of the states in which Foran Financial Group’s financial experts are fully registered or licensed may they converse or do business with them. Residents of any other state are not permitted to make or accept any offers.

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