So, you want to save more money this month? Of course, you do. You clicked the link and you’re reading this article! 🙂
Well, saving money is often easier said than done.
I’m not going to sugar coat things here and say it’s easy. One of the core beliefs of Tip Yourself members is our understanding that hard things are hard. We don’t pretend achieving big goals is easy.
Tip Yourself members also don’t shy away from a challenge. We overcome. So, let’s get to work!
What should you do to save more money this month? Before I get there, let’s define some terms.
All of your spending each month is one of two types: variable or fixed.
Variable spending is costs that go up and down each month. You don’t spend the same amount every month on variable expenses.
Fixed spending is costs that are the same each month. Money spent in this type doesn’t change from month to money.
You then have Want vs Need spending. Here’s a full breakdown of all four categories:
Optional spending. The money you spend where you have a choice.
- Variable Wants — Often spur of the moment spending. Example: A night out with friends, restaurants, shopping for some new clothes, etc.
- Fixed Wants — Often monthly subscriptions or other expenses where you get a monthly bill. Example: Netflix, Cable Bill, Gym Membership
Required spending. The money you spend where you have little or no choice.
- Variable Needs — Costs that are not always the same. Example: Gas for your car, Home electric and heating bills
- Fixed Needs — Regular Bills and Debt Payments. Example: Rent or Mortgage payment. Car Payment
Now that you know the four categories. Let’s find places where you can save more money this month.
First of all, to be clear, we’re talking about finding places to save more money this month. We’re not talking about extremes. We’re not talking about saving as much money as possible. You need to still live your life.
The goal is to find tradeoffs. You want to find money you can save and feel good about it. Look for spending that isn’t as important to you as your goals.
What’s important spending and what’s not important is completely personal.
It’s up to you. Some people consider their monthly Netflix subscription a fun luxury that’s not super important. To others, their Netflix subscription may be an extremely important source of escape and entertainment.
What’s important and what’s optional is completely up to you. Personal finance is personal.
Start at the top of the categories listed above. Start with your variable wants. Are there any of those that you can skip this week?
I say “this week” for a reason. You don’t have to make absolute rules. You don’t have to never spend money on a variable want again.
For example, you don’t have to stop all spending at Starbucks. Focus on one week at a time, even one day at a time. Did you skip Starbucks today? Did you bring a lunch to work today? Great, then Tip Yourself!
For me, not setting rules and absolutes has been the secret. I like the freedom of knowing it’s my choice. I could go out for dinner tonight with my wife if we want to go, but if we decided to cook at home instead, I’m putting the money we saved into my Tip Jar.
After you get through Variable Wants, you can look at your Fixed Wants and see if there are any bills you can skip. Work your way down the list of all four categories and see if you can find a few places where you can save couple bucks.
Kristin Wong calls this the Where Do I Cut Back Pyramid in her book Get Money. It’s a great way to organize your spending and look for tradeoffs you can make.
When you find some spending that you can skip, recognize the savings by adding some money to your Tip Jar. That added bonus of reward and the ability to see your Tip Jar grow is a great source of motivation.