1. Track your expenses.
Engineer-turned-advisor and founder of WealthMobius.com Bily Xiao says: “Too many adults do not have an accurate view of their income and expenses. But if you measure it, you can improve it. So start tracking, take stock of how much you’re saving, identify low-hanging fruit of expenses you can cut, and start setting some incremental goals to increase your saving. Make use of great tools like Mint.com (syncs with your financial accounts) or YouNeedABudget.com (more manual and private) for tracking.” Let’s dive a little deeper into tracking your expenses and learn how that can help you save money.
First, recognize that there are two different types of expenses: one-time and subscription. One-time expenses are those that usually happen once. As one-time expenses, they don’t generally reoccur over time. For example, you might pick up an ice cream cone at the store versus signing up for an ice cream cone subscription. This is considered a one-time expense – even if you end up buying the same type of ice cream cone again at a later date.
One-time expenses can be a big deal when it comes to eating away at your bank account, especially if they occur frequently. However, they can be fairly easy to track since you have to make these purchases manually. Because they are on your radar, it’s easier to identify these expenses and do something about them.
Subscription expenses are those that keep popping up over time, and even monthly. Recurring expenses include bills such as your water bill, cable bill, and rent. You’re signed up, so you expect to receive these bills every so often. The cost of these subscriptions may or may not be fixed.