Have you ever wanted to make extra money — immediately? Maybe you did a quick Google search on how to earn more and then tried things like selling items online, starting a side hustle, or taking online surveys.
These activities can generate extra income. But let’s not forget one of the most powerful ways you can generate a little extra money to put into savings at the end of the month: focus on reducing your spending.
Reducing your spending offers a variety of benefits, including financial security, the ability to save for short- and long-term goals, and, eventually, financial independence. Increasing your savings rate by reducing what you spend monthly doesn’t have to be a heroic endeavor, but it does take a little advance planning and a desire to save more and spend less.
Create More Financial Security
What expenses are in your control to eliminate or reduce? Start here — and don’t forget about the power of negotiating.
By reducing your spending on the things you can control, you’ll create more financial security if you move that savings into a designated account. Consider taking the money you’ve saved throughout the month and add it to your emergency fund. Or bump up your contributions to investment accounts if you’ve been lagging behind.
Both actions will bring you more stability in your financial situation.
Fund Your Goals When You Eliminate Expenses
By reducing your spending, you’re allowing yourself to build up a savings for important life goals. These goals can be anything you’re looking forward to in the future, like buying a home, starting a family, traveling, 0r reaching financial independence.
A regular savings plan will enable you to save for these goals and more. Additionally, consistently sticking to a budget with reduced spending will also allow you to automate your savings. Once you get into the habit of saving $100 (or more) a month, you can automatically have that money withdrawn into a dedicated savings account and not even miss it.
There are several places you can keep this money, beyond a regular savings account, including:
- Roth or Traditional IRA
- Contributing to your retirement account via your employer
- Money market accounts (especially if you want to keep your money more liquid)
Achieve Financial Independence
Over time, you’ll strengthen your savings habits and get accustomed to spending less. As you get into the habit of regularly reducing your spending and forgoing things you don’t really need, you’ll learn to live on less. One of the best things about reducing your spending is that is saves you money now — and every dollar you don’t need to spend brings you that much closer to financial independence.
When you reduce your spending, you’ll realize you never really needed much “stuff” to begin with. If you can live well on less, that means you need less money to fund your lifestyle. The less you need fund your lifestyle, the sooner you’ll be financially free.
By reducing your spending now, you’ll be able to be financially secure, save for your goals, and achieve financial independence sooner than your peers. Think of reducing your spending as investing in yourself and your potential — you’ll find reducing spending is easier than you think!
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