You’ve tracked. You’ve targeted. And now?
Now you get to Trim.
Now that you know where your money goes and what your goals are, you have a better sense of where you can “trim” your spending to achieve those goals.
Ready? Let’s get started.
How to Trim Your Finances
Start by reviewing your tracking work. You may have some surprises from when you initially categorized all of your spending habits…. like discovering you spend way too much on transportation when you thought you were spending too much on eating out.
Now it’s time to start trimming.
Note your biggest overruns. Are they shopping, food, entertainment?
Look carefully at these categories. Where can you cut back?
For example, do you need your cigarettes or daily Pepsi?
The easiest way to start trimming is to replace your bad habits. I know, easier said than done, but it works. If you need help with this, I recommend starting with this article from James Clear.
The most recent thing I started to trim was the amount of junk food I bought. I found that just buying junk food on Fridays, as a treat, saved 300 dollars a month!
If you have a debt repayment goal, here’s where you can start making dents. Shift your spending from one of your categories (and bad habits) into your debt.
You can also look at other areas to trim your expenses so you can put as much money toward spending down your debt.
I know it’s tough, but you can do this.
Here are some tools to help you with your trimming.
Create a balanced budget
Start by creating a balanced “budget.” This budget worksheet from Gail Vaz-Oxlade called Gail’s Interactive Budget Worksheet is a great tool to help keep you on track from month to month and help you not go over in certain categories.
Use the Debt Repayment Worksheet
Another tool to help you redirect your money towards your debt and savings goals is the Debt Repayment Worksheet. This worksheet is another one from Gail Vaz-Oxlade and will help you “snowball” your debt and use it to pay down each of your subsequent debts faster.
You can also use this Savings Calculator from Tangerine to help see how much you need to save each month to reach your goals.
Make it a Habit
No matter what your targeting goals are, frequently look back on your tracking and continue to trim any overruns you have in your spending. Shift your spending towards paying down your debt or towards your financial goals.
You’ll need to review and reevaluate every month to keep on track.
Being financially “fit” is a lifelong skill, and you need to have constant vigilance to stay on top of your money. But now that you have the tools, you’re ready to tackle your money goals each and every month.
In the next post, we’ll go over how training will help keep you on track with your finances. So stay tuned and come ready to hit the financial gym. 🙂